Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SCOTTISH EQUITABLE LIFE ASSURANCE SOCIETY BILL

Read the Third time and passed.

GREATER LONDON COUNCIL (MONEY) BILL

Read a Second time and committed.

BRITISH RAILWAYS (NO.2) BILL (By Order)

CHESHIRE COUNTY COUNCIL BILL [Lords] (By Order)

LONDON TRANSPORT BILL (By Order)

EAST KILBRIDE DISTRICT COUNCIL BILL (By Order)

Orders for Second Reading read.

To be read a Second time upon Thursday.

Oral Answers to Questions — DEFENCE

NATO (Ministerial Meetings)

Mr Arnold: asked the Secretary of State for Defence when he expects to meet his NATO colleagues.

The Secretary of State for Defence (Mr. Francis Pym): I expect to meet my NATO colleagues at the ministerial meetings of the nuclear planning group and defence planning committee later this year.

Mr. Arnold: When my right hon. Friend next meets his colleagues, will he try to obtain an ordered response to the new problems posed by the conclusion of the SALT negotiations in circumstances in which ratification appears to be problematical? Does my right hon. Friend believe that that is possible?

Mr. Pym: Yes. Our American allies have kept us closely informed throughout the negotiations that they have been conducting bilaterally. By the time the meetings to which I referred take place no doubt the signature of SALT II will have taken place, and, possibly, ratification, too, though that is a more doubtful proposition.

Dr. M. S. Miller: Does the Secretary of State think that it makes any difference that the Warsaw Pact countries have the ability to destroy the world three times over while we have the ability to do it only twice?

Mr. Pym: One factor is vital, particularly in view of the sustained build-up of forces on the other side of the Iron Curtain. It is that the deterrent capability of the West should be in first-class order and should be seen by the Soviet Union and Warsaw Pact countries to be totally capable of deterring them from any aggressive intention.

Mr. Buck: When my right hon. Friend meets his NATO colleagues, will he start paving the way for a major initiative for the recasting of the NATO role so that it can truly become the defensive shield of the Western world, irrespective of its geographical guidelines as they now exist?

Mr. Pym: I am sure that that is something to which we can give consideration. It is doubtful whether any changes in the boundaries of NATO would make a great deal of difference, but I am certain that all the countries of the free world are interdependent and that the greater our collaboration the greater will be the success of our deterrent and security effort. However, I would certainly not exclude possibilities such as those my hon. and learned Friend has in mind.

Mr. Frank Allaun: Do the new Government adhere to the previous Government's professions at the United Nations disarmament conference a year ago? If so, how does the Secretary of State reconcile that stance with the further expenditure on arms now proposed?

Mr. Pym: Arms control is a process to which this Government, as did the last, have given a great deal of attention and sustained support. But it will not come about by itself. It can come about only from a position of negotiating strength, and therefore we must retain the balance of the two.

Mr. Proctor: asked the Secretary of State for Defence when he expects to meet his NATO colleagues.

Mr. Pym: I refer my hon. Friend to the answer which I gave earlier today to my hon. Friend the Member for Hazel Grove (Mr. Arnold).

Mr. Proctor: Is my right hon. Friend aware that the Labour Party's manifesto for the recent election contained a reference to the withering away of NATO? Will he reverse this and do all that he can to increase the numbers in our Armed Forces by increasing their pay, conditions, equipment and morale?

Mr. Pym: I am grateful to my hon. Friend for those remarks. That which he urges me to do is the Government's intention. Within a couple of weeks of being appointed I was fortunate enough to go to a NATO defence Ministers' meeting. It was helpful to me to have an early opportunity to discuss these important issues with other members of NATO. It is the Government's intention to increase our defence capability. As my hon. Friend knows, we have already increased the pay of members of the Armed Forces in accordance with our commitment. That

by itself is not enough completely to restore morale, but it is an important part of that job. The decision was taken within a few days of the Government being elected to office.

Mr. Skinner: The right hon. Gentleman has said today that the Government are still considering a new generation of nuclear weapons but in an interview on BBC2 that was shown last Saturday the Foreign Secretary, Lord Carrington, committed Britain to a new generation of nuclear weapons. I should like to know who is speaking the truth. Is it not a scandal that someone from another place should make a statement committing Britain to all the public expenditure involved in such a policy when the right hon. Gentleman does not admit it from the Dispatch Box?

Mr. Pym: The hon. Gentleman is trying to make a scandal where none exists. Our commitment to a nuclear deterrent is clear. I have made it clear from the Dispatch Box this afternoon. We are determined to maintain that deterrent. There is no division or scandal such as the hon. Gentleman would like to invent.

Mr. Jim Spicer: Is my right hon. Friend aware that there is a strong body of opinion within the NATO Alliance which believes that there is a case for the establishment of a second ACE mobile force with a parachuting capability? Will he undertake to discuss that with his NATO colleagues when he next meets them?

Mr. Pym: I take note of what my hon. Friend says. I have not yet considered that matter, but I take note of his request.

Mr. Stoddart: Will the right hon. Gentleman confirm or deny that there is to take place later this year a planned nuclear test explosion? If he confirms it, will he stop it?

Mr. Pym: I think that I am right in saying that no Government of any colour have ever declared any circumstances or details about any possible nuclear tests. I do not think that that has ever taken place under any Government, and I do not propose to break that tradition.

Service Men (Pensions)

Mr. Stephen Ross: asked the Secretary of State for Defence what steps he


intends taking to rectify anomalies in pension provision for Service men who retired during 1977.

The Under-Secretary of State for Defence (Mr. Keith-Speed): The anomalies arise from the incomes policies of the previous Administration, and affect not only the Armed Forces but a wide range of other public service pensioners. Consequently, it is likely that any remedies would be complex and have significant repercussions on public expenditure. I shall, however, carefully examine this issue, but cannot hold out any hope of early remedial action.

Mr. Ross: Judging by the remarks made by Government spokesmen when in opposition, does the Minister accept that many people, particularly those in the Forces who retired in 1977, were hoping for a rather more forthcoming answer than that? Can the Minister give us some indication of the timing of the review and when those who retired from the Forces in 1977, who incidentally were suffering losses of over 30 per cent., can expect to have some remission of that loss?

Mr. Speed: No, Sir, I cannot because we cannot consider the Armed Forces in isolation. There are many thousands of people involved in the public service sector. This is a very complex situation largely arising from the statutory policy of the Labour Government. They created the problem. We are doing our best to sort it out as quickly as possible.

Mr. Viggers: Does the Minister accept that a grossly unfair situation has arisen as a result of the strict pay policies of the previous Government and that on a long-term basis the right answer is to create a floor and to say that no one who retired with a certain number of years' service at a certain rank should be paid less than that floor?

Mr. Speed: That is certainly one of the options that we shall be looking at. There are a number of possible solutions to this problem and I ask the House to be patient until we have examined all the options, bearing in mind that it applies to the whole of the public service and not just to the Armed Forces.

Dr. Summerskill: In view of the welcome decision, revealed to me in a parliamentary answer today, that the entitle-

ment, generally, of Service women will be brought into line with that of Service men, will the Minister assure us that the gross discrimination against women in terms of pensions, on the ground of sex, will be urgently reconsidered and their position brought into line with that of Service men?

Mr. Speed: That, with respect, is another question, but I certainly hope that there will not be gross discrimination in this way.

Mr. Duffy: May I congratulate the Under-Secretary on his ministerial debut at Question Time, and may I extend to him most sincere good wishes in the discharge of what, after all, is a privilege, and a precious task, namely, the representation in Parliament of the Royal Navy? Will the Minister confirm that there has been no want of willingness to rectify these anomalies and acknowledge that, because of the repercussive effects on the public sector which he has described, it is most difficult to find a practical and acceptable solution?

Mr. Speed: I thank the hon. Gentleman for those very kind remarks, which I appreciate. It is a privilege to represent the senior Service in this House. The second part of the question is complicated. We have got to look at all the people concerned and not one particular section. That is why it will take time.

Departmental Land

Mr. Andrew F. Bennett: asked the Secretary of State for Defence what plans he has to speed up the return of his Department's land to civilian use.

Mr. Dalyell: asked the Secretary of State for Defence what plans he has to make available land and houses, superfluous to his Department's use, to civilian use by local authorities.

The Under-Secretary of State for Defence (Mr. Barney Hayhoe): The Services need sufficient land to meet their operational, training and housing needs but we shall continue to release land and property as soon as it is clear that it is not required for defence purposes. I am carrying out a thorough examination of the scope for speeding-up this process. The disposal of surplus land etc., is of course the responsibility of my right hon.


Friend the Secretary of State for the Environment.

Mr. Bennett: In view of the enthusiasm of the Conservative Party for selling off national assets, will the Minister speed up the return of land of outstanding natural beauty at Lulworth Cove, Dartmoor and in the Pembrokeshire area to farmers and for recreational use?

Mr. Hayhoe: We shall be considering all the possibilities for disposal of land and this review will take place as soon as possible.

Mr. Dalyell: Will it be before the end of July?

Mr. Hayhoe: I cannot give an undertaking as to time because, as the hon. Gentleman knows, this is a substantial matter. We would like to do it thoroughly and properly.

Defence Codification Authority and Agency

Mr. Peter Bottomley: asked the Secretary of State for Defence when was the last review of the decision to relocate the Defence Codification Authority and Agency away from Mottingham, London, SE9.

The Under-Secretary of State for Defence (Mr. Geoffrey Pattie): I refer my hon. Friend to the reply given in a written answer yesterday by the Minister for the Civil Service announcing a review of the overall dispersal programme, including that of the Ministry of Defence.

Mr. Bottomley: Is my hon. Friend aware that he could save the waste of nearly £2 million by leaving the most substantial employer in my constituency in my constituency?

Mr. Pattie: I am indeed aware of that fact and it will be taken into account in the review.

Neutron Bomb

Mr. Stallard: asked the Secretary of State for Defence if he will make a statement on the official policy concerning future development and use of the neutron bomb.

Mr. Pym: We accept President Carter's decision of a year ago to defer a final decision on the production of enhanced

radiation weapons. This remains the United States' position. There is no British development programme of enhanced radiation technology, nor is one planned.

Mr. Stallard: I am grateful for that reply. However, in view of the Prime Minister's recent interview in Time magazine, in which she expressed the view that our forces should be equipped with more effective nuclear weapons, is it now the policy and intention of the Government to put Britain back into the nuclear arms race?

Mr. Pym: Britain is, and has been for a long time, in the nuclear arms race. Our nuclear forces, strategic and theatre, are absolutely indispensable to our security and to that of our NATO allies.

Mr. Cormack: Is my right hon. Friend aware that not everybody in this country is entirely happy with President Carter's handling of these matters?

Mr. Pym: That may be so but it is certainly not my responsibility.

Mr. Stan Thorne: In dealing with official policy for the future is the Secretary of State prepared to consider the Lucas Aerospace corporate plan with regard to diversification and resources?

Mr. Pym: I have to tell the hon. Gentleman that I have not yet had the opportunity of studying that plan in any detail but at this stage I would not be prepared to exclude consideration of it.

China (Weapons Sales)

Mr. Adley: asked the Secretary of State for Defence if he will make a statement on the sale of defensive weapons to the Government of China.

Mr. Pym: We want to enlarge our trade relations with China. We are considering Chinese requests for British military equipment and shall continue to do so on a case-by-case basis. We are willing in principle to supply some items of equipment, subject to our international obligations.

Mr. Adley: In thanking my right hon. Friend for that reply, may I ask him to confirm that Her Majesty's Ministers will stick with the same line that our party took in opposition on this matter? Will he give an unequivocal undertaking


that the Government will now expedite the sale of the Harrier to the Government of China and take rather less notice of the Tribune group than was taken by the previous Government?

Mr. Pym: Negotiations for the sale of the Harrier, which began in the time of our predecessors are, of course, continuing between the industries involved and the Chinese. Naturally we hope that a satisfactory outcome will develop in due course.

Mr. Newens: Does the right hon. Gentleman recognise that there is no clear line of demarcation between defensive and offensive weapons and that the supply of any form of military equipment to China would raise world tension? Does he wish to avoid this?

Mr. Pym: I do not accept that the supply of arms to China necessarily increases world tension. I accept that it is difficult, perhaps, to differentiate exactly between the purposes for which a weapon may be used but, as I have said, we, like our predecessors, are considering the possibility of selling equipment on a case-by-case basis. We are looking at it in that light and I believe that that is the best way to proceed.

Dr. Gilbert: May I ask the right hon. Gentleman whether he proposes to apply any different criteria to those applied by my right hon. Friend in such matters as defence sales?

Mr. Pym: I have nothing to add to the reply I gave in my original answer, that is to say that, subject to our international obligations, we shall look at these requests when they come on a case-by-case basis.

Emergencies (Military Response)

Mr. David Price: asked the Secretary of State for Defence what measures he proposes to take to increase the ability of Her Majesty's forces to respond rapidly to emergencies, including brush fire police activities and natural disasters in both a NATO and a Commonwealth context.

Mr. Hayhoe: We have already made clear by our actions that defence is being accorded a higher priority by this Government Improvements in the Services' general capabilities should aid our ability to take military action, where it might be

judged appropriate, in the wide range of circumstances my hon. Friend appears to have in mind.

Mr. Price: Does my hon. Friend agree that the ability of our country to respond to the kind of emergency that I have outlined in my original question is severely limited by the shortage of transport aircraft?

Mr. Hayhoe: I am not able to comment on that problem but this can certainly be looked at speedily in view of the comment of my hon. Friend.

Mr. Molyneaux: Dealing with the Army's role in Northern Ireland in support of the civil power, is the Minister fully satisfied that units have the required degree of flexibility to enable them to meet the rapidly changing tactics of their enemies?

Mr. Hayhoe: Yes, on the information available to me I am satisfied that that is so. I hope soon to make a visit to Northern Ireland to see something of these matters for myself.

Mr. Churchill: Since the strength of Britain's Armed Forces, after full mobilisation, is smaller than that of Switzerland, Sweden or even tiny Finland—with one-twelfth of our population—is my hon. Friend satisfied with the level of our reserve forces, and, if he is not, will he announce that it is his firm intention to increase the size of those forces?

Mr. Hayhoe: We certainly place substantial importance upon the role of the TAVR in the defence of our country. There are critical manning problems, and we hope that the pay rises which have been announced will at least go some way towards resolving these.

Mr. Hooley: Will the Minister ensure that British forces are trained and undertake exercises to equip them for taking part in United Nations peacekeeping operations?

Mr. Hayhoe: As the hon. Gentleman knows, we are at present taking part in the United Nations peacekeeping force in Cyprus and we give logistic support to the United Nations force operating in the Lebanon. Certainly, the training that our forces have fits them to play a first-class role in this respect.

Polaris Submarine Fleet

Mr. Canavan: asked the Secretary of State for Defence whether he will abandon any plans to replace the Polaris nuclear submarine fleet.

Mr. Newens: asked the Secretary of State for Defence if he will indicate his policy on the development of a new generation of nuclear weapons to replace Polaris in due course.

Mr. Cook: asked the Secretary of State for Defence if he will make a statement on whether he intends to replace the Polaris fleet.

Mr. Pym: The Government are fully committed to maintain an effective strategic deterrent. We shall, therefore, continue the programme to modernise the present Polaris force so that it remains a deterrent to aggression into the 1990s. We shall also be considering what steps should be taken to maintain that capability thereafter.

Mr. Canavan: Since the Polaris fleet has already cost us over £2,000 million and will probably cost over £3,000 million at least to replace, and in view of the Treasury's obsession with the need to cut public expenditure, will the Government make a valuable contribution to the national economy and to the development of international peace by scrapping any plans to replace Polaris with another generation of weapons of mass destruction?

Mr. Pym: In view of the role which Polaris has played for our country and our NATO Allies, it was cheap at the price. Unless we are satisfied that our forces and capability, with those of our Allies, are adequate to preserve our security, there will not be any country left to preserve.

Mr. Newens: Does not the right hon. Gentleman recognise that the creation of a new generation of nuclear weapons would pre-empt a huge amount of public expenditure at a time when many of us are expecting savage cuts to be made in other spheres concerning education, health and welfare? Ought we not to place a higher priority on the standards of our people at home than on creating a deterrent which in the long run can only make

this country more vulnerable to nuclear attack than would otherwise be the case?

Mr. Pym: It is difficult to put a price upon the preservation of our freedom and our civilisation, but that is the most important thing. Of course, arms control is an objective of this Government, as of our predecessors, but it must be done on the basis of strength. One of the worries in defence at the moment—in fact, the principal worry—is the massive build-up on the other side of the Iron Curtain. The Warsaw Pact countries spend an enormous sum of money on increasing their arms—far beyond anything necessary for their own defence, I may say—and what we want to see is a willingness on the part of the Warsaw Pact countries to negotiate genuinely for arms control similar to that which prevails on this side of the Iron Curtain. So I must say to the hon. Gentleman that in the meantime, even though it is expensive, and even though obviously no one actually wants to spend money in this way, it is necessary so to do in order to preserve our security and to get us into a position where we can, one hopes, negotiate from strength in the direction which he wants.

Mr. Cook: The right hon. Gentleman has referred to arms control. Has he noted that next year will bring the next quinquennial conference reviewing the non-proliferation treaty? Does he expect that there will be the slightest hope of any of the potential nuclear States, such as India and Brazil, paying any attention to anything said by Britain if that conference takes place in the wake of a decision by Britain to cling to its own bankrupting membership of the nuclear club?

Mr. Pym: As the hon. Gentleman knows, this Government's predecessors, supported by him, took a view very similar to that which we ourselves take. Obviously, I cannot answer his question in detail about the attitudes which might be taken next year at such a conference, but in our view the position remains that, like it or not, unfortunately it is absolutely essential that we have a nuclear capability at this time.

Mr. Biggs-Davison: Is my right hon. Friend giving consideration to collaboration with France in keeping an up-to-date contribution to the Western deterrent on our side of the Atlantic?

Mr. Pym: Yes, Sir; I want to see the closest collaboration not only with France but with all our Allies in NATO. I regard this as a most important development and I want to give every impetus that I can to extending it. Certainly that is true with regard to France. I shall be going over fairly soon to Paris for conversations with my opposite number there, and I should certainly like to develop in that direction.

Mr. Meacher: Do the Government now propose to build a nuclear cruise missile in this country as a partial replacement of Polaris, and, if so, how can it be an independent deterrent if the microelectronic circuitry work has to be sub-contracted to the Americans?

Mr. Pym: All these matters are coming under consideration now, as they would have done under the Labour Government. It is too early to take any decisions, but all the possibilities, options and factors to which the hon. Gentleman refers must be taken into account before any decision of the magnitude we have been talking about could possibly be taken.

Mrs. Kellett-Bowman: I welcome my right hon. Friend's assurance that he will go into the question of the capability of the Polaris submarines' successors after 1990. Will he do all in his power to expedite the covered facility at Barrow which would enable Barrow to build the next generation of nuclear submarines, should he so decide, as I hope he will?

Mr. Pym: Perhaps my hon. Friend will put down a separate question on the subject of Barrow, when I shall certainly look into it.

Mr. Flannery: In view of the massive and increasing nuclear power of the Americans, which, of course, would be a retaliatory power, does not the right hon. Gentleman think that whatever we have is insignificant compared with that, and will he tell us bluntly: who is he expecting to attack us?

Mr. Pym: The nuclear strength of the United States—as is our own nuclear strength—is essentially deterrent. It is retaliatory, too, but it is deterrent, and our own nuclear capability is an addition to that deterrent, since without it the Soviet Union or the Warsaw Pact coun-

tries would have to take into account only the United States retaliatory strike capability, whereas, by having it ourselves, we are able to have a second decision-making process for nuclear retaliatory capability. That is undoubtedly an added strength to NATO and is thought to be so by our NATO Allies.

Recruitment

Mr. Gwilym Roberts: asked the Secretary of State for Defence what are the latest figures available for the cost of recruiting a soldier, sailor or airman.

Mr. Pattie: In the financial year 1978–79, 43,366 men and women joined the Armed Forces. On this basis, the average cost per recruit was £588. The figures for the Navy, Army and Royal Air Force were £787, £488 and £680, respectively.

Mr. Roberts: Will the hon. Gentleman agree that these figures are too high and they could be somewhat reduced by our getting rid of the prestige recruiting offices that we have in job centres, concentrating recruitment in town centres and concentrating it through the job centres in the same way as other engineering and technical jobs are recruited?

Mr. Pattie: I am aware of the hon. Gentleman's consistent interest in this matter, and his suggestion about job centres is being actively pursued at present. I ask him to bear in mind that the overall cost of recruiting also includes the cost of processing applications and the whole of the pre-assessment that goes on, so that the figures are not excessively high at present.

Mr. Onslow: Will my hon. Friend point out to hon. Members on the Opposition Benches that the best way of achieving economies in this respect is by having a Government who care about having efficient Armed Forces, who care about the pay and morale of Service personnel, and who offer a worthwhile career in the defence of our country?

Mr. Pattie: I am grateful to my hon. Friend for his constructive remarks. He and the House may be sure that the recent pay award will do a great deal to improve Service recruiting.

Mr. Douglas: Will the hon. Gentleman bear in mind the pay and conditions of the personnel in Her Majesty's dock-


yards? Skilled men are being lost at Rosyth because the pay and conditions at the dockyard are not comparable with those in outside employment.

Mr. Pattie: The important matter that the hon. Gentleman raises is primarily for the Civil Service Department. None the less, it is of concern to the Ministry of Defence and it will be watched accordingly.

Mr. Mulley: Will the Minister give an assurance that the cuts proposed for the Civil Service will not apply to the industrial Civil Service so as to deprive the dockyards and other essential elements of the Ministry of Defence of the skilled manpower that they need to recruit?

Mr. Pattie: The former Secretary of State should be aware that the matter to which he refers is not properly for me but is for the Civil Service Department.

Mr. Wellbeloved: asked the Secretary of State for Defence if he intends to implement in full the recommendations contained in the report of the Review of Recruiting Organisation; and if he will make a statement.

Mr. Pattie: I am of course aware of this report and am now considering it in detail.

Mr. Wellbeloved: Will the hon. Gentleman speed up his consideration? Is he aware that the report contains many worthwhile proposals which will improve efficiency, increase recruitment and reduce the unacceptably high cost of recruitment?

Mr. Pattie: I am aware of the interesting proposals contained in the report. It comes ill from the hon. Gentleman to urge the Government to speed matters up when we consider what he left behind him.

Mr. Stephen Ross: Does the hon. Gentleman accept that recruiting economies will be of no avail if the drain from the Services continues? Will he confirm that Service men in the Navy are still leaving in large numbers despite the recent substantial pay increase? Is he aware that ships that should be in commission are now being laid up?

Mr. Pattie: It is much too early to say what will be the effect on Service per-

sonnel who were thinking of leaving the Services. However, the hon. Gentleman is right when he suggests that in tandem with the important matter of recruiting goes the equally important matter of retention.

Soviet SS20 missile

Mr. Wall: asked the Secretary of State for Defence if he will make a statement on the methods he proposes to adopt to counter the Soviet SS20.

Mr. Pym: As my hon. Friend knows, NATO has never sought to match particular systems deployed by the Warsaw Pact with particular systems of its own; but the deployment of such systems as the SS20 has increased the urgency of ensuring that NATO's longer-range theatre nuclear forces are kept up to date.

Mr. Wall: Is my right hon. Friend aware that NATO does not have a weapons system in its armoury that can match the 3,000 miles plus range of the SS20? Will he press ahead with our American allies to develop a cruise missile, and also, possibly, a mix with a new long-range tactical nuclear missile?

Mr. Pym: I assure my hon. Friend that I am already pursuing the possibilities and options for modernising our theatre nuclear forces. It is a matter of great urgency. I have had the opportunity of discussing these matters with some of my colleagues in the United States and Europe. It is the intention of us all to press ahead in this area as a matter of urgency. The nature of the threat that we face has increased, and that is serious. That is why we are proceeding as quickly as we can.

Mr. Alan Clark: Does my right hon. Friend accept that there is an increasing weight of opinion that the best way of countering these missiles is not with an added weight of retaliatory nuclear explosive but through electronic counter-measures? Will he assure the House that in the next defence budget the appropriation of funds for research and development in that work will be greatly increased?

Mr. Pym: At this stage I cannot possibly commit any detail of next year's defence budget. I assure my hon. Friend that all the possibilities and options are


being considered most actively so that between us we may make what will be the soundest choice in view of the circumstances that confront us.

Mr. Cook: Does the right hon. Gentleman agree that it was a pity that 10 years ago Western European Powers lobbied the United States to leave out medium-range nuclear systems from the SALT talks? Does he agree that if they had been included it might have inhibited development of the SS20? As NATO still has a superiority in forward based systems, does he agree that it would be sensible to achieve a negotiated arms control in that area rather than clutter up Europe with yet more theatre nuclear systems?

Mr. Pym: Whatever may have happened, been advocated or taken place 10 years ago, we have to face the situation as it is today. The Government feel that Britain's defences have been run down to a capability that is not adequate for our needs. As I have said, we are actively considering with our allies the modernisation of our nuclear forces. The unfortunate fact is that we shall not be able to achieve the reduction of arms on both sides as the hon. Gentleman wants, and everybody wants, unless we are strong enough to be able to negotiate a satisfactory disarmament agreement.

NATO (United Kingdom Contribution)

Mr. Viggers: asked the Secretary of State for Defence if he is satisfied with the United Kingdom contribution to the southern flank of NATO.

Mr. Pym: I do not believe that there is any room for complacency in any area of our contribution to the Alliance. In consultation with our allies we shall aim to make our contribution as effective as possible.

Mr. Viggers: Does the Secretary of State accept that our present contribution to the southern flank of NATO is nothing more than negligible? In view of the improvement in morale and commitment that we could encourage by making some further presence on the southern flank, does he accept that we should now reappraise the area in which we make our contribution to NATO?

Mr. Pym: I have a great deal of sympathy with what my hon. Friend has said. I have already had the opportunity of having discussions with the defence Ministers of, for example, Portugal and Turkey. Our commitment and presence there is of a limited kind. None the less, we have been able to be helpful to Portugal in the matter of equipment. We are giving aid to Turkey. We want to develop this relationship because we share the view that the southern flank of NATO is obviously an important part of the Alliance.

Mr. Flannery: Will the Minister assure us that members of the Conservative Party do not live in a state of permanent terror, expecting somebody from Eastern Europe constantly to bombard us with nuclear weapons? We have a general impression that the Tories are all ready to get into uniform.

Mr. Pym: I think that a uniform would do the hon. Gentleman quite a lot of good. [HON. MEMBERS: "Withdraw".] The hon. Gentleman is enjoying it. We shall not live in anything that may be described as a reign of terror, as the hon. Gentleman suggested, provided that our defences and security are adequate to ensure that we are able to continue in peace.

Mr. Flannery: On a point of order, Mr. Speaker.

Mr. Speaker: Order. We take points of order at the end of questions.

Mr. James Callaghan: Is the Secretary of State for Defence aware that my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) served in the Armed Forces as gallantly as anybody in this House? Will he therefore withdraw any aspersion that he made.

Mr. Pym: I am aware of that. I was not implying anything about the hon. Gentleman—although he made accusations about Government supporters. If he feels offended, I shall certainly withdraw. At the time I made the remark it seemed to me that he thought it was quite humorous.

Shir Tanks

Mr. Dickens: asked the Secretary of State for Defence, if he will take steps to


underwrite the order for tanks placed by the previous Iranian Government to ensure their use by the British Army.

Mr. Hayhoe: We are giving urgent consideration to all the implications—and there are many—of the cancellation of the Iranian order for Shir tanks.

Mr. Dickens: Is my hon. Friend aware that, due to termination notices in my constituency, many skilled tank workers are likely to be put out of business unless the Government do something?

Mr. Hayhoe: The Government are fully aware of the employment implications of the cancellation of this order. Careful consideration is being given to these aspects of the matter.

Mr. Mulley: Cannot the Minister give a little more encouragement in response to this question? Are there no alternative possibilities? Before the general election I was aware of a number of other sales possibilities. I had hoped that by now something rather more positive could have been said.

Mr. Hayhoe: As the right hon. Gentleman will be aware, there are other possibilities for sales. These are under consideration. It has been the practice of successive Governments not to give details of such orders when they are at this stage.

Mr. Churchill: Bearing in mind that last year the previous Administration placed in mothballs more than 10 per cent. of the operational Chieftain tanks of the British Army of the Rhine, can my hon. Friend say when he will be able to assure the House that these tanks are fully operational?

Mr. Hayhoe: If my hon. Friend will table that precise qustion, we shall certainly give him an answer. It has very little to do with the cancellation of the Iranian order.

Mr. Dalyell: Does the Minister have a cost estimate of acceding to his hon. Friend's request, and, if not, why not?

Mr. Hayhoe: Not in reply to a question about the cancellation of the Iranian order.

Mr. Kaufman: Will the Minister consult his right hon. Friend the Secretary of State about what urgent action may

be taken to deal with the cancellation of the Iranian order at Yarrow shipyard in view of the important employment implications on the Clyde?

Mr. Hayhoe: Urgent consideration is being given to all aspects of this cancellation. The employment consequences are, of course, one of the major considerations.

Service Doctors (Recruitment and Remuneration)

Mr. Charles Morrison: asked the Secretary of State for Defence if he will make a statement on recruitment and remuneration of doctors in the Armed Forces.

Mr. Pym: During the past few years the Armed Forces have been unable to recruit the number of doctors that they require. One of the reasons for this shortfall has, no doubt, been the level of pay.
The Armed Forces Pay Review Body makes recommendations on the appropriate pay levels for Service doctors and dentists as well as for the combatants. The Government have decided that, like the combatants, Service doctors and dentists will receive their full appropriate levels of pay effective from 1 April 1979. We are now awaiting a supplementary report from the review body on these appropriate levels of pay for Service doctors and dentists. When these have been implemented I believe that recruitment into the medical services will improve.

Mr. Morrison: Will my right hon. Friend say when this report will be available?

Mr. Pym: I cannot give a precise date, but it will be in the fairly near future.

NATIONAL ECONOMIC DEVELOPMENT COUNCIL

Mr. Michael Latham: asked the Prime Minister when she expects next to take the chair of the National Economic Development Council.

The Prime Minister (Mrs. Margaret Thatcher): No dates have yet been arranged.

Mr. Latham: When will the NEDC examine the shameful and dreadful figures for British productivity and national income compared with those of


France and Germany, which were so eloquently reported to the previous Labour Government by our new ambassador in Washington?

Mrs. Thatcher: I share my hon. Friend's interest in that dispatch from Sir Nicholas Henderson. We had been trying to put across the analysis for a considerable number of months. I agree with my hon. Friend that if we want a German and French standard of living we must have a German and French standard of work. I trust that later today my right hon. and learned Friend the Chancellor of the Exchequer will have something to say about giving incentives for that.

Mr. Maclennan: Will the right hon. Lady take the opportunity of the NEDC meeting—and the earliest opportunity in the House as well—to expand on her remarks made at a press conference recently about the future of her plans for energy, and especially for alternative energy supplies and the nuclear programme? Is she aware that the House would like to hear that from her at an early date?

Mrs. Thatcher: I fear that if I did so it might take the rest of Question Time. If we are to keep up and expand the level of production in the world we must look for alternative sources of energy and vigorously pursue them.

Mr. Adley: Is my right hon. Friend aware that when she goes to the NEDC she will probably be advised by trade union representatives that all the workers in all the nationalised industries are opposed to whole or partial denationalisation? Is she aware that that is untrue and that many people in, for example, British Aerospace and British Airways look forward to hearing the Government's proposals? Will she therefore find some way of ascertaining not the views of the politically motivated trade union leaders but those of the work force?

Mrs. Thatcher: I am grateful for what my hon. Friend says. Like him, I have not found nationalisation popular among the electorate. In due course we shall present proposals for attempting to have less public sector ownership and more private sector ownership. When we do that we shall pay special attention to those who work in the industry and to giving

them a chance to purchase shares in the undertakings in which they work.

Mr. Anderson: As a combination of public expenditure cuts and stricter controls on cash limits is bound to lead to higher unemployment, especially in times of a growing world recession, will the right hon. Lady indicate what she considers to be an acceptable level of unemployment?

Mrs. Thatcher: The combination to which the hon. Gentleman referred would release more resources for the private sector. The private sector tends to be the productive sector. It is the sector from which future jobs will come.

PRIME MINISTER (ENGAGEMENTS)

Mr. Geoffrey Robinson: asked the Prime Minister if she will list her public engagements for 12 June.

The Prime Minister: This morning I presided at a meeting of the Cabinet. Later I was present when Her Majesty the Queen welcomed the President of the Republic of Kenya. In addition to duties in this House, I shall have further meetings with ministerial colleagues and others. This evening I shall attend a dinner given by Her Majesty in honour of President Moi.

Mr. Robinson: That is obviously a very busy schedule, but may I ask the right hon. Lady whether, in the course of it, she can find a moment to seek confirmation from her right hon. Friend the Secretary of State for Industry that the detailed and convincing case submitted to his Department today for a waiver of interest and a recapitalisation of the Government loan for the Meriden co-operative will be considered on its merits and not on the basis of any irrelevant political or ideological prejudices?

The Prime Minister: My right hon. Friend always considers things on their merits, and fairly and justly as well. The hon. Gentleman, if I understand his question correctly, is asking for interest to be waived on loans. That is a very serious thing to ask. Governments have to borrow money in order to lend it again. Governments cannot waive their interest, and I hope that when undertakings borrow money in these circumstances they


will deem it a matter of honour to meet the interest payments.

Mr. John Mackay: May I ask the Prime Minister whether, in the course, of her busy day, she has had a chance to read an article in The Daily Telegraph yesterday about Rhodesia, in which it was suggested that the European Commissioner for Development at the EEC had written a letter to Mr. Joshua Nkomo congratulating him and urging him on in his fight there? If I may quote from the article—

Mr. Speaker: Order. The hon. Member is probably not aware that hon. Members may not quote at Question Time.

Mr. Mackay: The letter is said to have continued by wishing Mr. Nkomo well in his gallant struggle. If my right hon. Friend has seen that article, would she like to comment on it?

The Prime Minister: It so happens that I saw the article and the quotation to which my hon. Friend refers. I took the view that it was most inappropriate for a member of the Commission to send a communication of that sort, and I have reason to think that other members of the Commission took the same view.

Mr. Heffer: In view of the fact that the right hon. Lady says that she and her right hon. Friends consider matters on their merits, will she tell the House what is the view of the Government concerning the National Enterprise Board, particularly as it has rescued a number of private enterprise companies which had failed and turned them into profitable organisations? These organisations would be lost to the nation if they went back to private enterprise.

The Prime Minister: The National Enterprise Board requires a great deal of taxpayers' money to continue its operations, and we have to consider the alternative use of taxpayers' money. We shall consider the future of that board on its merits. One of the merits is that it is taxpayers' money that is being used. We cannot get away from that.

Mr. Eldon Griffiths: Will my right hon. Friend take an opportunity in the course of today to consider a matter on which I imagine the whole House will wish to congratulate her, namely, the resounding

success of the Conservative Party in the European elections? Will she take an early opportunity to give to the country and to the European Parliament her own views as to how the new Europe will be able to formulate common policies in the vital fields of energy and foreign policy?

The Prime Minister: I agree with my hon. Friend that we wish all new Members of the European Parliament well. It is the first democratic international Parliament. It was a historic occasion. We could have wished that there had been a higher turnout. Energy, of course, will be one of the problems that the Parliament can tackle. I trust that our Members will put a forthright view on matters which are of particular interest to this country concerning other aspects of European policy.

CANNOCK CHASE

Mr. Gwilym Roberts: asked the Prime Minister if she plans to visit the Cannock Chase district.

The Prime Minister: I have no plans to do so.

Mr. Roberts: Has the right hon. Lady studied the figures, showing that only 27 per cent. of the electorate in the Cannock Chase district voted in the recent EEC election? Does not this reflect the general disenchantment of the British people with the EEC? In this context, will she give the British people in the next year or two an opportunity of voting again on continued membership of the EEC?

The Prime Minister: No, Sir.

TUC

Mr. Stoddart: asked the Prime Minister when last she met the Trades Union Congress.

The Prime Minister: I have not met the TUC but I met the general secretary on 31 May.

Mr. Stoddart: When the right hon. Lady meets the TUC, will she assure it that all the talk of confrontation was so much electioneering blather on her part and on the part of her right hon. and hon. Friends? Will she tell them that it is her


intention, and the intention of her Government, to co-operate with the trade unions and seek the co-operation of the TUC and the Government, which proved to be so good for this country over the past four or five years?

The Prime Minister: I must point out to the hon. Gentleman that I talked not about confrontation but about a proper balance between power and responsibility, which is vital to the future of democracy. I stand absolutely on those statements. I believe that we shall receive the co-operation of the trade union movement. Without the votes of many trade unionists we should never have had such a large majority.

Mr. Mellish: That is absolutely right.

Mr. McCrindle: Would not the laudable objective to which the hon. Member for Swindon (Mr. Stoddart) has just referred be considerably advanced if the trade union leaders were prepared to accept that they cannot and should not stand in the way of the pursuit of policies upon which the Government were returned only a few weeks ago?

The Prime Minister: I do not believe that the trade union leaders will stand in the way of those policies. This country needs to raise productivity. For that we need to get rid of some overmanning and some restrictive practices. I hope that when people have the incentive to do so they will get rid of them, and that when we have top management once again we shall be able to make advances which will enable this country to compete on full and equal terms with our European competitors.

Mr. Wigley: When the Prime Minister meets the TUC, will she, in view of the petrol shortages and the increasing price of petrol, give an assurance that her Government will in no circumstances allow any railway lines to be closed?

The Prime Minister: I could not possibly give any such assurance, and I doubt very much whether the hon. Member expected me to give an unqualified, positive answer. I point out to the hon. Gentleman that the petrol shortages now are very small compared with those that we endured in January.

Mr. Mike Thomas: When the right hon. Lady meets the TUC, will she ex-

plain to it her use of the English language in parliamentary answers to me? How is it that, in the matter of the advanced gas-cooled reactor turbine generator orders, she is able to say of the Think Tank that she has not received guidance from it, she has not received information from it, yet was able suddenly to discover yesterday that she has received advice from it?

The Prime Minister: Because between the hon. Gentleman's first question and his second question on this matter I received advice from it.

Mr. Marlow: Will the Prime Minister agree that the turnout for the European election was disappointing and that to a certain extent the European Parliament is on probation? Does she further agree that if, in five years' time, at the next European election, we do not have a better turnout, showing a greater interest by the British people, we shall have to consider afresh our relationship with our friends in the European Community?

The Prime Minister: I must be as candid with my hon. Friend as I was with the hon. Member for Cannock (Mr. Roberts). The answer is "No", but I think that the political parties may be able to increase the numbers voting at the next European election.

Mr. Thomas: On a point of order, Mr. Speaker. I hesitate to raise this matter on a point of order, but is it in order that the right hon. Lady should provide me with what I believe to be inaccurate information through the mode of both written and oral parliamentary answers?

Mr. Speaker: Order. The Prime Minister is responsible for her own answers. This is not the first time that hon. Members have not liked the answers which they have received.

Mr. Thomas: Further to that point of order, Mr. Deputy Speaker. I am sure that your predecessor has not left the Chair deliberately. Is it not a matter of the greatest seriousness for the Chair and the House, not that I should receive a reply that I do not wish—of which I would not complain—but that I should receive an inaccurate reply?

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. It is not for the Chair to give a direction on the kind of answers that Ministers give to questions.

WAYS AND MEANS

BUDGET STATEMENT

Mr. Deputy Speaker (Mr. Bernard Weatherill): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

INTRODUCTION

3.32 p.m.

The Chancellor of the Exchequer (Sir Geoffrey Howe): It is a little over five years since my predecessor, the right hon. Member for Leeds, East (Mr. Healey) rose at this Dispatch Box to present his first Budget. The House will have seen today the honour recently conferred upon him by Her Majesty. I am sure that the House will wish to join me in congratulating the right hon. Gentleman on the great honour that has been conferred upon him.
Like me, the right hon. Gentleman approached this task within a very few weeks of his party's success at a general election. In compressing the huge and complex process of Budget-making into so short a time, he faced—as I have done—a formidable task.
It is right for me to say that I have received unstinting support, not just from my fellow Treasury Ministers but from many people, of every rank, within the Treasury and the two Revenue Departments. But for their willingness to work far beyond the call of duty it would scarcely have been possible for me to present this Budget at all. So I gladly echo my predecessor in acknowledging this assistance with a very real sense of gratitude.
I echo the right hon. Gentleman, too, in saying that I approach my task—and I assure the House that I quote his very words—
in a mood of humility and trepidation"—[Official Report, 26 March 1974; Vol. 871, c. 277.]
I say that not just because of the novelty of the experience for me—although that is daunting enough—but

much more because of my sense of dismay at the disturbing familiarity of the occasion from the point of view of almost everybody else.
As the House will recall, this is the fourth Budget in the last 15 years to be introduced by a new Chancellor in a new Government. The late Iain Macleod, alas, did not live long enough to be included in this series. Before me there was, in 1964, the present Leader of the Opposition; in 1970, my noble Friend Lord Barber; and, in 1974, the right hon. Member for Leeds, East.
The depressingly familiar feature of the first Budget speech of each of those three predecessors is that every one of them found cause to complain, with more or less justice, about the disagreeable nature of the estate that had come his way.
The House will understand, in the light of the most recent evidence about inflationary trends, monetary growth, Government borrowing and the deteriorating trade balance—not to mention the postdated cheques for public sector pay that I found on arrival at the Treasury—that I am certainly in no position to discontinue the tradition of my predecessors.

THE YEARS OF DECLINE

So many other facts tell the same story. Consumer spending rose last year, in percentage terms, by seven times as much as manufacturing output. We actually manufactured 4 per cent. less goods in 1978 than in 1973. But the volume of manufactured imports went up by 13½per cent. Though demand was rising strongly, and unemployment remained high, the economy was almost unable to increase supply. The current account of the balance of payments was barely in surplus last year, despite a massive contribution of £3½ billion from North Sea oil and gas. And well before the last Administration left office inflation was back on a rising trend. Although many price increases had been held back behind the general election dam, the rate of inflation in the six months to April—excluding seasonal foods—was running at no less than 12·3 per cent. at an annual rate.

On that form and on the policies which brought it about, there is little reason to expect any improvement in the future.


Productivity is rising less than half as fast as in the early 1970s. There is no sign of any change for the better there. Last year's growth in demand could never have been sustained, because, as the trade figures make clear, it was largely met from imports. That was the main reason why the recent fall in unemployment was, in any event, likely to be reversed.

It would be easy to conclude that these difficulties are all the fault of the last Administration. Certainly the Labour Party bears a heavy responsibility. Labour Governments have, after all, been in office for 11 of the last 15 years. Even so, I want to consider our problems in an even longer perspective.

Only a quarter of a century ago—within the memory of almost every Member of this House—the people of the United Kingdom enjoyed higher living standards than the citizens of any of the larger countries of Europe. Amongst the free nations of the world, Britain was then second only to the United States in economic strength.

It is not so today. For example, France and Germany's combined share of world trade in manufactured goods, which in 1954 was almost the same as Britain's alone, is now more than three times as large as ours. The French people now produce half as much again as we do. The Germans produce more than twice as much, and they are moving further ahead all the time.

There has, of course, been plenty to say in mitigation of all this. At least until recently, we have been able to claim a good record in most of those things that can be summed up in the phrase "the quality of life". But in the last few years the hard facts of our relative decline have become increasingly plain, and the threat of absolute decline has gradually become very real. That is not a prospect that I am prepared to accept. Nor, I believe, are the British people. They realise that we cannot for ever go on avoiding difficult choices in the fatal, and increasingly futile, quest for easy solutions.

INTERNATIONAL BACKGROUND

Of course, as inhabitaints of a country that has always been deeply involved in the international economy, we pay a great deal of attention to events outside

our own country. But it would be very dangerous if preoccupation with this or that world crisis—the oil crisis, the dollar crisis or whatever—led us to believe that our economic troubles could be blamed mainly on the outside world. The truth is that our troubles are very largely home-made. If we tackle them ourselves, we can pull our own economy round, even in a world of slow growth. If we do nothing to change course, nothing that happens beyond these shores can help us.

As it happens, the international environment is unlikely to give us any comfort in the years immediately ahead. Oil prices are now, on average, about 30 per cent. higher than six months ago. That is one reason why growth in most countries is likely to be significantly lower than in 1978. So we clearly now need to do more about both conservation and supply of energy.

For that reason, it will be an important subject for discussion at the next meeting of the European Council and at the economic summit in Tokyo at the end of this month.

In this disturbed situation, the European Community can, and should, be a source of stability and strength for its members. In one important area, however, present EEC policies are seriously hindering our efforts to help ourselves. The United Kingdom and Italy, which are among the poorer members of the Community, are transferring substantial resources to richer member States—[HON. MEMBERS: "Oh."]—chiefly through the Community budget. We have already made it very clear to our partners that this cannot be allowed to continue. [HON. MEMBERS: "Oh."] It is plainly unfair, and it is against the interests of the Community itself. We shall continue to press for an agreement which meets our case.

I repeat, however, that progress internationally, whether on energy policy or within the Community, will not cure the deep-seated weaknesses of our own domestic economy. Nor will North Sea oil. Growing production will certainly put us in a better position than other countries, without oil of their own, but it must not be allowed to conceal the grim truth about what has been happening to the balance of our own trade, particularly in manufactured goods.

North Sea oil will itself do nothing to solve the problems on the supply side of our economy. Nor will it check inflation. Indeed, in some respects it may actually make matters worse, unless we correct some other aspects of policy which are at present working in the wrong direction.

THE CAUSES OF DECLINE

So we find ourselves, yet again, asking the question: how are we to check, and then reverse, the long decline? In particular, what can we, here in this House of Commons, do about it?

We do well to begin, I suggest, by acknowledging that there is a definite limit to our capacity, as politicians, to influence these things for the better. I suspect that that view is much more widely accepted outside this place than it is within.

I do not mean to be unkind to my predecessor when I invite the House for a moment to consider his experience. The Government of whom he was a prominent member consistently behaved as if it were possible for the Government to manage, indeed to plan, the economy, so as to promote efficiency and growth. The right hon. Member for Leeds, East did this with notable enthusiasm. In five years of office he introduced no fewer than 15 Budgets and economic "packages", and financed a wide range of policies in the name of "the regeneration of industry".

But at the end of five years the right hon. Gentleman must ask himself, to what avail? Has the industrial strategy, as he conceived it, really transformed the outlook for British industry? Are we not driven to the conclusion that the notions of demand management, expanding public spending and "fine tuning" of the economy have now been tested almost to destruction?

Certainly the Leader of the Opposition has come round to that view. He said in a memorable speech on 28 September 1976 to his own party conference at Blackpool:
We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you, in all candour"—
said the right hon. Gentleman—
that that option no longer exists …".

The right hon. Member for Leeds, East has, in the event, been proclaiming

the same conclusion. He has, throughout, asserted the importance of monetary policy. He rightly began the practice of setting money supply targets, and he claimed to make his public spending plans accordingly. This means that I am able to approach my task this afternoon on this one, crucially important piece of common ground: that the poor performance of the British economy in recent years has not been due to a shortage of demand. We are suffering from a growing series of failures on the supply side of the economy.

A NEW BEGINNING

It is our belief that many of these failures are themselves the result of actions and interventions by the Government themselves—laws that stand in the way of change and stifle enterprise; and, as important as anything, a structure of taxation that might have been designed to discourage innovation and punish success.

Of course there are many other causes of our decline. That is not in dispute. But we believe that it is more sensible for the Government to make those beneficent changes that are undoubtedly within their power than to preach the need for changes that lie well beyond their authority. Certainly, improvement remains unlikely unless we are prepared to change the laws and taxes to which I have referred.

That is why the British people are convinced—as we believe—that it is time for a new beginning. Our strategy to check Britain's long-term economic decline, which has gathered pace in the last five years, is based on four principles.

We need to strengthen incentives, by allowing people to keep more of what they earn, so that hard work, talent and ability are properly rewarded. We need to enlarge freedom of choice for the individual by reducing the role of the State. We need to reduce the burden of financing the public sector, so as to leave room for commerce and industry to prosper. We need to ensure, so far as possible, that those who take part in collective bargaining understand the consequences of their actions—for that is the way to promote a proper sense of responsibility.

Those principles require substantial change in the way in which our economy is allowed to work. The tax changes that I shall propose today will be only the


first step. They will take us a long way in the right direction.

INFLATION

But those changes will not themselves be enough unless we also squeeze inflation out of the system. It is crucially important to reestablish sound money. We intend to achieve this through firm monetary discipline and fiscal policies consistent with that, including strict control over public expenditure.

Financial responsibility on the part of Government must be supported by responsibility elsewhere. People must understand and accept that the only basis for real increases in wages and salaries is an increase in national production. Higher pay without higher productivity can lead only to higher inflation and unemployment. It is important for that to be fully understood by all those concerned with wage negotiation. We shall be more than willing to consider better methods of ensuring that it is.

Given the monetary and fiscal policies to which we are firmly committed, irresponsibility is bound, as I have said, to threaten jobs. This indeed is the clear evidence of recent history, most plainly in the private sector.

Responsible bargaining necessarily means different things to different people and in different kinds of firms and industry. But on both sides of the table, and on both sides of the House, certain limitations must be recognised: in the public sector, what the ratepayer and taxpayer can afford; in industry, what the customer is prepared to pay, what the firm needs to invest, and what the pressure of competition demands; and, throughout the economy, the limits imposed by the need to control the money supply.

MONETARY POLICY

As I have already observed, my predecessor was undoubtedly right to adopt a system of monetary targets. But his other policies were seldom consistent with his own monetary objectives. Thus, although monetary growth in 1978–79 as a whole was just within the target range of 8 per cent. to 12 per cent., it was growing in the second half of the year at an annual rate of almost 13 per cent. Moreover, the May figures, now becoming

available, indicate that the underlying growth is still above the top of the range and, if anything, accelerating. One cause of this has been the alarming rate of central Government borrowing—£2½ billion in April and May alone.

It is now clear that the public expenditure policies which we inherited would have made it quite impossible to meet the right hon. Gentleman's 8 per cent. to 12 per cent. target without a further savage squeeze on the private sector, involving not just higher interest rates but also a sharp increase in the total tax burden. Not for the first time, the levels of public spending and borrowing which he permitted were far too high to be compatible with his own monetary targets. Reluctantly, I shall myself be obliged to take painful action to correct that mistake.

We are committed to the progressive reduction of the rate of growth of the money supply. I therefore intend, despite the discouraging backcloth, and as the first step in this process, to reduce the targe range for the remainder of this year, 1979–80. The new target range, to apply to the growth of sterling M3 in the 10 months to the banking make-up day in April 1980, will therefore be an annual rate of 7 per cent. to 11 per cent., but I will roll the target forward by six months in the autumn.

Equally important, I intend to improve the way in which the monetary target is achieved. We need to rely less on curbing the private sector, and put more emphasis on fiscal restraint and economy by the public sector. That requires, as a first step, a significant reduction in the public sector borrowing requirement from the figure of around £10 billion that it would otherwise have reached this year.

There are, however, limits to what can be done in this Budget, with two and a half months of the financial year already passed, to curtail the scale of public spending in the current year. This is indeed a severe handicap. Even so, I intend to reduce the public sector's financial needs enough to make it possible to achieve my monetary target with less restraint on the private sector.

But the fiscal measures which I am announcing today must inevitably take time to take effect. They cannot immediately reduce the seriously excessive monetary growth that we have inherited.


Particularly given the continuing surge in bank lending, I have concluded that there is no option but to act directly to reduce that growth. It is not enough to speak of the importance of monetary policy, unless one is prepared to carry one's words into practice.

The Bank of England is accordingly rolling forward the supplementary special deposit scheme, or "corset", by three months on the existing basis. In addition, the Bank is announcing, this afternoon, an increase in its minimum lending rate by 2 per cent. to 14 per cent. [HON. MEMBERS: "Oh".] I must make it very plain to the House that the necessity for this action ranks alongside last week's trade figures as entirely characteristic of the legacy of the last Administration.

I return now to consider the right size of the public sector borrowing requirement in the current year. As my predecessor found to his cost, this is a fickle and elusive statistic, so I offer my judgment of the scale of Government borrowing in 1979–80 with a degree of caution. Having said that, my best estimate is that the changes in taxation and public expenditure which I am announcing today will be sufficient to reduce the PSBR to £8¾billion in the current year, as compared with the outturn of £9¼billion for 1978–79. As a percentage of GDP, that will represent a reduction from over 5½per cent. last year to under 4½per cent. in the current year. The public sector deficit will also fall from 4½per cent. to 3¾per cent. of GDP. These are important steps in the right direction. I intend to continue along that path in the years ahead.

It will no doubt be argued by some—although I do not think that it can be so argued by my predecessor—that fiscal action to bring down the PSBR to the figure I have mentioned is unduly severe. Indeed, the conventional forecasting arithmetic, which, in accordance with custom and stature, I am publishing in the Financial Statement, does suggest that the economy will show no growth in the period immediately ahead.

But this prospect, in so far as it can be viewed as a reliable prediction—which itself is open to doubt—cannot be taken to mean that the Budget is, in the traditional language of neo-Keynesian economists, perversely contractionary. To make that claim is to argue

that an alternative course of fiscal policy would produce more growth and more employment. I believe that argument to be profoundly wrong.

To aim at a significantly higher public sector borrowing requirement—in other words, to case the stance of fiscal policy—would serve only to fuel the fire of inflation. In the end, we should have less growth, less employment, and even higher prices. Even the Leader of the Opposition must accept that, in the light of the words that I quoted from what he said at Blackpool nearly three years ago. It follows that any decline in economic activity which might, on a narrow view, be attributed to this Budget will be essentially the consequence of the economic situation which has made such measures inevitable, while inflation is being brought under firm control.

EXCHANGE CONTROL

I come now to my proposals, and I deal first with the question of exchange control. Sterling is at present relatively strong, and I expect it to remain so. That strength flows partly from the realisation that, as a result of North Sea oil, the United Kingdom is better placed than most of our competitors to deal with present world oil problems. Moreover, our fiscal and monetary policies should maintain confidence in the currency. This is, therefore, an appropriate time to start dismantling our apparatus of controls on outward capital flows. Our present regime is more restrictive than that of any other major industrialised country. There is an overwhelming case, in this context as in others, for giving both companies and individuals wider freedom of choice. This should reduce the distortions and costs which controls are bound to impose on economic decisions. These costs bear particularly heavy on smaller companies.

We intend to move one step at a time. In the initial stage, the emphasis will be on direct investment overseas. Details are being made available in the Vote Office. The main relaxation will be to make official exchange, to the extent of £5 million per project per year, freely available for new outward direct investment. This should allow the majority of United Kingdom firms which invest overseas all the sterling finance they are likely to want. The two-thirds rule, which restricts the reinvestment of profits earned overseas,


will be abolished. In response to Labour Members, I must say that this greater freedom in the financing of direct investment abroad does not, as is sometimes feared, and as they suggest, threaten jobs in the United Kingdom. The weight of evidence is that overseas investment generally strengthens our position in world export markets to the benefit of output and jobs in this country. Moreover, additional investment overseas today will yield an income that will stand us in good stead when the overseas earnings from North Sea oil begin to decline.

During the sterling crisis of 1976, the last Government stopped the use of sterling to finance third country trade. That restriction has placed British merchants at a disadvantage in international business, and I am taking the opportunity to restore the facility to them as soon as the details can be worked out.

I have also decided that there should be some immediate easement of the controls affecting individuals. I am therefore, making significant relaxations in the rules concerning travel and emigration allowances, overseas property, and cash gifts and payments to dependants. In regard to portfolio investment, I am taking two modest steps at this stage. I am abolishing the requirement to maintain 115 per cent. cover for overseas portfolios financed by foreign currency borrowing, and official exchange will henceforth be available for meeting interest payments on such borrowing. The 1975 controls on gold coins will also be abolished. As the House knows, the liberalisation of exchange controls is one of our obligations under the EEC Treaty. I have accordingly discussed with the Commission the decisions that I am announcing today.

As time goes by, I intend to take further steps in the progressive dismantling of exchange control. The pace of relaxation will obviously be influenced by sterling's strength, as well as by the speed with which we can solve the economic problems that face us.

In our external policy we have also to take account of our official external debts. These at present amount to$22 billion—a massive increase on the$8 billion which the previous Government inherited in 1974. It is our intention to reduce that burden of external debt substantially during the life of this Parliament.

PUBLIC EXPENDITURE

In order to reduce the borrowing requirement and the burden of direct taxation, we must make savings in public spending and roll back the boundaries of the public sector. We are totally committed to improving standards in the public services. But that can be achieved only if the economy is strong in the first place. So that will be our first priority. Finance must determine expenditure, not expenditure finance. Substantial reductions in expenditure can, and will, be made in the remainder of this financial year.

First, as I made clear three weeks ago, we shall not raise the cash limits to cover prices higher than those provided for in the cash limits originally published for this year. On pay in the public services, while we will honour the commitments to the universities and the health authorities entered upon by our predecessors, in general we shall limit the adjustment of the cash limits so that substantial offsetting economies will have to be found.

The need for substantial economies applies equally to local authority expenditure, where the Government's contribution is made through the rate support grant. As I said three weeks ago, we shall take account of pay settlements in calculating the increase orders for the rate support grant, but we shall make a significant across-the-board reduction from the total so calculated.

I can now tell the House that the reduction will be £300 million for England and Wales and £35 million for Scotland. That is, of course, to be set against total rate support grant expenditure of about £9 billion. These figures may have to be increased when we know the cost of further pay increases and will be finally determined in November, before the increase orders are made. In coming to this decision, a major factor has been how much in present circumstances it is reasonable for the taxpayer to contribute.

The cash limits on Departments and fringe bodies are being set to ensure that economies of 3 per cent. are achieved on manpower costs this year, as announced by my hon. Friend the Minister of State, Civil Service Department. I estimate that this cash limits policy will reduce the volume of planned expenditure by about £1 billion at 1979 survey prices.

On top of these reductions resulting from the policy on cash limits, my right hon. and hon. Friends have reviewed the plans for their Departments and the nationalised industries and have identified further specific reductions which are being made this year. The changes are listed in a notice to be issued by the Treasury and available in the Vote Office. Further details will be given by the Ministers concerned. But the House will want to know where the main reductions will be made. All figures that I quote are at 1979 survey prices.

We are making an immediate start in reducing expenditure on industrial and employment subsidies. My right hon. Friend the Secretary of State for Industry is cutting expenditure on industrial support this year by £210 million. This will come mainly out of the provision for new projects by the Department of Industry and by the National Enterprise Board, and by imposition of a delay of four months in payment of approved claims for regional development grant. Support from the employment programmes is to be concentrated on the areas where unemployment is highest. Savings of over £170 million will be made in those programmes this year.

In the area for which my right hon. Friend the Secretary of State for Energy is responsible, savings of over £320 million are being made this year in the finance for BNOC and the electricity, gas and coal industries. The industries have been asked to avoid so far as possible increases in fuel charges beyond those required to meet the cash limits announced by the previous Government.

My right hon. Friend the Secretary of State for the Environment is making savings of about £440 million from his programmes this year, mainly by scrapping the Community Land Act, deferring water authority investment and reducing existing allocations to housing authorities.

As we have repeatedly made clear, it is not our intention to reduce spending on the Health Service. But we cannot ignore the fact that the contribution made by some health charges has greatly diminished in recent years. This applies especially to prescription charges, which have stood at their present level for eight years, during which prices have risen

over two and a half times. It is therefore proposed to increase prescription charges to 45p. This will still leave them cheaper in real terms than they were in 1971, and the present wide range of exemptions covering children and the elderly amongst others will, of course, be maintained. Certain dental charges will also be increased. Those changes will yield £34 million in 1979–80 for Great Britain as a whole.

My right hon. and learned Friend the Secretary of State for Education and Science is reducing expenditure in those areas of the education and science programmes within the Government's direct control by about £55 million. We shall not add to the increase of 5p in the school meal charge which was planned by our predecessors for the autumn term.

The aid programme this year is being reduced by £50 million. Savings are also being made on the transport, trade and arts programmes.

My right hon. Friends the Secretaries of State for Scotland, Wales and Northern Ireland are making comparable reductions in their own programmes.

In total, these reductions amount to almost £1½ billion this year.

In addition, we do not intend to use as large a Contingency Reserve as provided for 1979–80 in the previous Government's public expenditure White Paper. We have decided to cut the reserve by £250 million. Any further decision to add to the volume of programmes in the remainder of this year will be met from the balance of just over £250 million which will remain in the reserve after today.

In two areas we are providing for increased spending—defence and pensions. An extra £100 million is being provided for the defence budget this year. This will enable essential projects in the equipment programme to go ahead. I shall return to pensions improvements shortly.

As I have already indicated, we are only just embarking on our review of the plans we have inherited and of the scope for reducing the size of the public sector. But it is already clear that the scope for sale of assets is substantial.

Sales of State-owned assets to the private sector serve the immediate purpose of helping to reduce the excessive public sector borrowing requirement with which


I was faced. This is all the more necessary this year, given the difficulty of cutting back public sector spending programmes once a year has already begun.

But such sales are not justified simply by the help they give to the short-term reduction of the PSBR. They are an essential part of our long-term programme for promoting the widest possible participation by the people in the ownership of British industry. This objective—wider public ownership in the true meaning of the term—has implications not merely for the scale of our programme but also for the methods of sale we shall adopt.

So far as this year's disposals are concerned, we must obviously retain flexibility on timing and on the precise mix of assets in order to ensure a fair price. I do not, therefore, propose to announce the details today. But I intend to ensure that the proceeds of sales in the current financial year will amount to some £1 billion and I have taken account of this in the Budget arithmetic. The biggest contribution to this total will come from the sale of a further part of the Government's shareholding in British Petroleum, where we shall be following the example set by the previous Administration.

In total, I estimate that the economies I have announced will amount this year to about £½ billion at 1979 survey prices and £4 billion at current prices. Yet, given the scale of the problem we have inherited, I must look for a further contribution from indirect taxes to finance the first stage of our plans for the reduction of income tax.

Before turning to the first of my tax proposals, I must make it clear that today's Budget will be able to deal with only a small part of the Government's tax agenda. Coming, as we do, to a Finance Bill at this late stage in the year, there is a physical limit to the amount of legislation that can be proposed and enacted. We have been unable to deal with many important matters. There will be other opportunities to consider those. At this stage, we have concentrated on tax changes of strategic importance. I turn now to the first of these.

INDIRECT TAXATION

We made it clear in our manifesto that we intended to switch some of the tax burden from taxes on earnings to taxes

on spending. This is the only way that we can restore incentives and make it more worth while to work and, at the same time, increase the freedom of choice of the individual. We must make a start now.

I have reviewed the whole field of indirect taxation to decide where the increased revenue could best come from. There are many cogent arguments at this stage in favour of value added tax.

First, large areas of consumer spending, in fact about half the total, are not chargeable to VAT. Food, children's clothes, heating and light, public transport, house prices and rents are all zero rated.

Second, poorer households tend to spend proportionately more of their income on such zero-rated goods. This means that, unlike most indirect taxes, VAT is not regressive.

Third, by comparison with taxes such as those on alcohol and tobacco, VAT is much more broadly based.

Fourth, there is a real opportunity for simplifying the operation of the tax by having one rate instead of two.

In his speech in the House on 22 May, the right hon. Member for Leeds, East seemed to favour increases in the surcharge on national insurance contributions or in advance corporation tax. The national insurance surcharge falls on the whole of British industry, including production for export, but not on imports. It is inferior in that respect to VAT, which falls on imports but not on exports. That is clearly significant in the light of the latest trade figures. An increase in advance corporation tax, which he also seemed to suggest, would damage the overall liquidity of industry at a particularly difficult time: by contrast, an increase in VAT actually increases liquidity.

For all these reasons, my choice must fall on VAT. Moreover, the increase I make must be sufficient to provide for substantial and worthwhile reductions in income tax. I propose, therefore, that as from next Monday VAT should be charged at a new unified rate of 15 percent.

Allowing for the wide range of goods and services that are zero rated, and will stay zero rated, the new rate that I propose is equivalent to 8 per cent. averaged


over the whole of consumer expenditure. That is significantly less than the average in the European Community.

The yield from the increase to 15 per cent. is estimated at £2,035 million in 1979–80 and £4,175 million in a full year. Thus, it will provide scope for further direct tax reductions in later years. The relatively small size of the yield this year reflects the loss of over two months' revenue between April and the present and the time lag allowed to traders before they pay over VAT receipts to the authorities—an average of over three months. I have referred to the helpful contribution that that gap provides towards improving liquidity. As these funds build up in traders' hands, they provide a substantial boost to the liquidity of the firms and companies concerned. Concern has been expressed that an increase in VAT could lead to some particular difficulties, for example in relation to telephone bills for calls made before the date of change. I am proposing transitional provisions to deal with that and some other problems of that kind.

The increase in VAT will of course add significantly to the point of sale prices of drink and tobacco. For example, the VAT increase will mean about an extra 28p on a bottle of whisky, approximately 2p on a pint of beer and 6p on a typical packet of 20 cigarettes. In these circumstances, I do not think that it would be justifiable to make a separate increase in the excise duty on drink and tobacco this year.

I fully realise that this increase in value added tax will result in a rise in prices—in fact, a rise of about 3½ per cent in the retail price index. This is, of course, a once-for-all effect. But there never will be a time when it is easy to effect the switch from direct to indirect taxes, and the present moment is clearly no exception. That much-needed reform has been postponed too long already.

The House should bear in mind that, as I have already indicated, VAT does not fall on a wide range of necessities. That means that the increase will fall less heavily on people in the lower income groups. As will be apparent when I come to my income tax proposals, I shall be leaving people with more money in their pockets with which to pay the increased VAT. I appreciate, however, that those

who are not liable to income tax—and I have in mind particularly many of those living on retirement pensions—will not benefit directly from my income tax proposals. That brings me to our proposals in the field of social security.

SOCIAL SECURITY PAYMENTS

The Government have decided to increase the standard rate of retirement pensions in November by £6·10 to £37·30 for a married couple and by £3·80 to £23·30 for a single person. These increases take full account of the underestimate which the last Government made of the actual rise in earnings between November 1977 and November 1978, and are well above the figures of £4 and £2·50 announced by the previous Government. Other social security benefits will also be increased, and my right hon. Friend the Secretary of State for Social Services will announce full details tomorrow.

This means that social security pensioners will be fully protected against the increase in prices. That is what is really important. But the extent to which we can afford to go further than that—to add improvements in real terms—must depend on the productive capacity of those in work.

Under the present rules, pensions are uprated on the basis of the movement in prices or earnings, whichever is the greater. The Government have decided, however, that for the future the requirement for the statutory uprating of pensions should be based on price movements, and we shall be introducing legislation to that end. That will be a minimum requirement and will fully protect the value of these pensions against price increases at all times, including those arising from indirect tax changes, such as I have just announced.

Mr. J. W. Rooker: That is treasonable.

Sir G. Howe: Of course we want, as much as the hon. Member for Birmingham, Perry Barr (Mr. Rooker), to be able to do more, but we realise that that depends on the strength of our economy. I am confident that in time, as our economy improves, it will be possible to do more and ensure that pensioners share in the increase in national prosperity. That is one more reason why my other


proposals today are so important. They are intended to strengthen the productive capacity of the economy as a whole, for the benefit of pensioners as well as every other citizen in the community.
We also propose to improve certain other social security benefits. Child benefit went up by £1 per week only two months ago, and we do not propose a further increse this year. But single-parent families face particular problems, and we propose that the one-parent premium should go up from £2 to £2·50 next November. We also want to help the disabled. Mobility allowance will accordingly be increased from £10 to £12 in the autumn, and we shall, of course, honour our commitment to pay a Christmas bonus this year of £10.
These measures overall are worth about £1,100 million in 1979–80 and £2,700 million in a full year. They are largely covered by the existing social security programme, and the balance has been charged to the Contingency Reserve. As the House knows, our general policy is to make substantial reductions in public expenditure, but that must not be done in a way that bears unfairly on the more vulnerable members of society.
Our social security system has become far too complicated and it sometimes acts to reduce the incentive to work. The problem is widely recognised on both sides of this House. We are therefore studying a number of aspects of the social security system to see what can be done to simplify it. My right hon. Friend the Secretary of State is also putting in hand urgent measures to tighten up on abuse and fraud.

TAXATION OF OIL AND PETROLEUM

Hydrocarbon Oil Duties

I dealt earlier with the excise duties on tobacco and drink. The oil duties, however, raise wider issues. I have already mentioned the general case for measures that will help us to meet the growing and undoubted need to conserve oil. At a time when there is a worldwide shortage of crude oil, it is essential that we should play our full part in achieving the 5 per cent. reduction in consumption to which the previous Government rightly committed us.

I therefore propose to increase all the main oil duties this year. In the particular case of petrol, the VAT increase from 12½ per cent. to 15 per cent. will be smaller than for many other items. With that in mind I propose to increase the petrol duty by 7p a gallon, which will result in a total price change of about 10p a gallon. I also propose to increase the duty on derv by the same sum, 7p a gallon, and the duty on heavy oil other than derv by ½p. I am not, however, increasing the duty for burning oil and for domestic paraffin, which is the oil used most commonly in the home, particularly by pensioners. The yield from these excise duty changes is estimated at an additional £525 million in a full year and £400 million in 1979–80. The immediate increase in the RPI will be about a quarter of 1 per cent.

Vehicle Excise Duty

In view of the increase that I am proposing in the road fuel duties, I have decided to make no change in the rate of vehicle excise duty. Our predecessors announced their intention of abolishing the duty on petrol driven vehicles. As my right hon. Friend the Minister of Transport has already said, we are reviewing the future of this duly and we shall announce our conclusions in due course. For heavier goods vehicles, my right hon. Friend will be announcing plans for restructuring the form of this tax.

Car Leasing

Before I leave the subject of motor cars, there is a particular issue that I need to deal with. There is a weakness in the present legislation on capital allowances which enables leased cars to avoid the special rules restricting allowances for business cars. This has resulted in a loss of tax which is currently running at about £175 million a year, and which could well rise to £200 million next year if I take no action. I propose to put this right with effect from today.

Petroleum Revenue Tax

I turn next to petroleum revenue tax. The previous Government announced last August that they proposed to increase this tax from 1 January this year. These proposals were discussed very fully by the last Government with the industry and we ourselves have had representations about


them, which we have carefully considered.

I have judged them now against the background of recent rises in the price of oil. On that basis, the original package of PRT proposals for giving the Government more revenue from the North Sea is now fully justified. Accordingly, there will be provisions in the Finance Bill to implement it. I also propose, however, to introduce some changes in the PRT expenditure rules for which the industry has been pressing for some time. The British National Oil Corporation will no longer be exempted from PRT.

These proposals will increase the Government's revenue from the North Sea—at 1978 prices—by about £110 million this year and by about £1,800 million over the period to 1985.

BUSINESS TAXATION—INCLUDING CAPITAL TAXATION

Before I deal with the taxation of business profits I propose to refer to the taxation of capital, a matter of vital interest to business as well as to individuals.

We made it clear in our manifesto that we were determined to make the taxation of capital simpler and less oppressive. The objection to capital gains tax in its present form is that most of the yield comes from paper gains arising from inflation. The tax is, therefore, a capricious and sometimes savage levy on the capital itself. The capital transfer tax, despite the improvements secured in the last Parliament by constant pressure from the Conservative Benches, is oppressive, harmful to business and a real deterrent to initiative and enterprise. It is perfectly natural that people should want to build up capital of their own and pass it on to their children, and this is particularly true of the small business proprietor.

The issues involved in both of these taxes are difficult and complex. I have, therefore, decided that we should not attempt to deal with them in the coming Finance Bill—abbreviated as it is bound to be—but should press ahead with a thorough study, with a view to legislation on all these matters at an early date. There is, however, one specific issue on

which legislation is required in order to hold the present position. I propose to extend for a further two years the period for CTT transitional relief for capital distributions from discretionary trusts and to defer for two years the introduction of the periodic charge.

The development land tax, however, is a very different matter, which calls for immediate action. This tax has combined with the Community Land Act to prevent much worthwhile development and to increase unemployment in the construction industries. We have already said that we will repeal the Community Land Act. I propose now to deal with the development land tax. In place of the present rates of 66⅔ per cent. and 80 per cent., which the previous Government intended should rise to 100 per cent., I propose that development land tax will in future be charged at a single rate of 60 per cent. The amount of development value which can be realised in a financial year without liability to development land tax will be raised from £10,000 to £50,000. Both these changes take effect for disposals made on or after today.

I do not propose to make any further reductions in rate, and the generous increase in the exempt slice should mean that it will not need early revision. Owners of development land will, therefore, have no reason for holding back in the hope of further tax reductions. What I have said today should remove the major uncertainties which have been hanging over the market.

I now turn to the taxation of profits. A vigorous, profitable and expanding company sector is essential if we are to rebuild this country's prosperity. Profitability has dropped sharply in recent years and the rate of return on capital employed is now far too low, especially in manufacturing industry.

Without higher profits we shall not see the new investment and jobs which are so urgently needed. Achieving those profits is very largely the task of management and workpeople. The Government can help or hinder them, and this is no time to add to the difficulties that they face by raising taxes on profits still further. Against that background I propose no change this year in the general system or in the rates of corporation tax. Nor would it be right to make any major


changes in the system of company taxation without careful consultation in advance.

Looking further ahead, however, it is important that the tax system should take account of the effects of inflation on businesses, and do so in a way that is reasonably objective, equitable and simple to administer. The Government will therefore be reviewing this matter along with the accountancy profession's latest proposals for current cost accounting. I am arranging for the Inland Revenue to consult the accountancy profession and business later in the year.

I need, however, to deal now with the question of stock relief. The Finance Bill will include legislation to honour the undertaking which my predecessor gave last year, and which we supported, to write off the deferred tax liabilities arising from stock relief given for the first two years of the scheme—1973–74 and 1974–75—and thereafter to write off these liabilities in respect of each subsequent year, after they have been outstanding for six years.

In addition, following consultations which the Inland Revenue has had with industry, I am proposing two further changes in the stock relief scheme. I intend to reduce the profit restriction for unincorporated businesses from 15 per cent. to 10 per cent.; and all businesses will be given greater flexibility in the amount of relief that they can claim. Both these changes will be of particular benefit to small businesses.

Details of the stock relief and car leasing proposals will be given in Inland Revenue notices which I am making available in the Vote Office.

I come now to dividend control. If industry is to flourish, it needs not only adequate profits, but a vigorous capital market to provide funds for investment and expansion. The control of dividends has now outlived its purpose, and will accordingly come to an end when the existing legislation expires on 31 July.

We on the Conservative Benches have consistently championed the cause of smaller businesses. So I also propose to raise this year the qualifying profit limits for the small companies rate of corporation tax to the figures of £60,000 at the lower end and of £100,000 at the upper

end. This will go some way further than is necessary to maintain their real value.

In the tax field, however, there is one measure that will do more than anything else to encourage smaller businesses—indeed, businesses of every size. That is a major reduction in the burden of income tax.

INCOME TAX

That brings me to the keystone of our policy. Excessive rates of income tax bear a heavy responsibility for the lack-lustre performance of the British economy. We need, therefore, to cut income tax at all levels. For the reasons I have already explained, I cannot do as much this year as I should have liked, and I cannot do as much as is needed. But, although it is only a first instalment, there should be no doubt in anyone's mind that this Budget marks a turning point.

I begin with the higher rates of tax. The upper rates no longer affect only those on very high incomes. They apply—and Labour Members may find this surprising—not only to senior executives and middle managers in industry but increasingly to skilled workers, as well as to professional people and the proprietors of small businesses. These are the people upon whom so many of our hopes for initiative, greater enterprise and national prosperity must depend.

It is universally recognised, or almost universally recognised, that the present top rate of 83 per cent. on earned income is an absurdity. The rate of 98 per cent. on investment income is even worse. Such rates bring in very little revenue. But they kill incentive and are patently un-just. Some members of the previous Government recognised this, but they did nothing about it. I now propose an overdue measure of reform. The top rate on earned income will be cut from the present 83 per cent. to 60 per cent. This now top rate will apply to taxable income over £25,000. [HON. MEMBERS: "Oh".] If hon. Members will wait, I shall come to the other end. At the other end of the higher rate scale, the present threshold of £8,000—and many skilled workers cross that threshold—is too low. I propose raising it to £10,000. Even at this figure, the starting point for taxation


at higher rates will be no higher in real terms than it was in 1973. Between £10,000 and £25,000, I propose a new scale of rates less steeply progressive than the old scale.

The top rate of 60 per cent. on earned income I now propose fulfils our commitment to reduce the top rate to the European average. For example, the top rate in France is 60 per cent., in Germany it is 56 per cent., and in the United States it is only 50 per cent. The new top rate will still be reached at an income level which is lower, and in some instances significantly lower, than is common elsewhere. This is a matter to which we may need to return on a future occasion.

So, while the reductions I propose are substantial, they are no more than the circumstances require. They will still in general leave people in the top income groups more highly taxed than people in corresponding positions in other industrialised countries. We have to compete with such countries, not only in the sale of goods and services but in attracting and retaining the talent required to run our industry efficiently and profitably and thereby provide the employment opportunities that our people so desperately need.

We have over the years spent far too much time and effort trying to "level down" This is no good to anybody. It is much more important to have a successful and prosperous society, and we cannot have a successful and prosperous society without successful and prosperous individuals.

But it is not only at the top of the income range that the burden of income tax is particularly oppressive. The same is true for those on the lowest taxable incomes, where the tax system can help to ensure that some people are actually better off out of work. That is the importance of the tax thresholds, to which I turn next. The increases proposed in the April Finance Act, which were not of course implemented, were plainly inadequate. I propose to double those increases. This means that the amount a single person can earn tax-free will go up not by £90 but by £180. The married allowance will go up not by £140 but by £280. A single person's tax-free earnings will

thus go up by nearly £3·50 a week. The amount that a married man can earn tax-free will go up by £5·38 a week. These increases in personal allowances are quite apart from the change that I have in mind for the basic rate of tax.

I have in fact three other changes to propose before I come to that. First, to help the elderly, the age allowance will be raised by £240 for the single person and £380 for the married person. These again are double the figures proposed in the April Finance Act. Last year the income limit for the full age allowance was £4,000. This year I propose raising it to £5,000, more than twice the increase proposed in the April Finance Act.

Secondly, I propose raising the threshold for the investment income surcharge. The justification for retaining the surcharge is itself debatable. Certainly there can be no argument but that it bites at far too low a level of income. Almost half the surcharge is paid by people over the age of 65. This is, moreover, a tax which falls with particular severity on those who have had to make provision for their retirement out of their savings and have no occupational pensions to fall back on. The undue severity of the tax was recognised by the previous Government, but they introduced no more than palliatives, in the form of a reduced rate applied to the first slice of income liable to the surcharge and a slightly higher threshold for those over 65. I propose instead to raise the threshold to £5,000 for everyone; the rate above that level will remain at 15 per cent. This approach goes further than is necessary to take the matter back to where it stood in 1972, and it combines a considerable simplification of the tax with a measure of justice that is long overdue.

Thirdly, I propose to implement immediately our election pledge to war widows. Provision will be made in the Finance Bill to exempt their pensions entirely from tax.

I come, finally, to the basic rate. For the great majority of taxpayers—some 21 million in all—it is the basic rate which determines their tax liability. It is the basic rate—plus, of course, the national insurance contributions—which represents the deterrent effect of tax on additional earnings, whether those extra earnings come from overtime or greater productivity or reflect greater skill or the


rewards of promotion. Everywhere one meets complaint and criticism that income tax erodes differentials, reduces the rewards of skilled workers and discourages effort, initiative and responsibility. This year I propose taking a first and significant step to deal with these complaints by reducing the rate from 33 per cent. to 30 per cent. Our long-term aim should surely be to reduce the basic rate of income tax to no more than 25 per cent.

The total cost of these income tax reductions, including the cost of increases in personal allowances proposed in April but not then implemented, will be £4,540 million in a full year. The lion's share, no less than £3,460 million or over three-quarters of the total, represents the cost of increasing the personal allowances and reducing the basic rate. The cost this year of all the income tax changes will be £3,500 million.

As a result of the increase in the tax thresholds, 1·3 million people who would otherwise have paid tax this year will not be required to do so. The number of people paying tax at the higher rates would have been 1·2 million. This will be virtually halved, to 650,000. The number liable to the investment income surcharge will be reduced to about a third of what it would have been—from 850,000 to 300,000. All these changes will simplify administration and reduce the work load on the Inland Revenue.

The changes in allowances will be implemented for most taxpayers on the first pay day after 12 July. The reduction in the rates of tax will be given effect as soon as new tax tables are ready in October.

A full year's income tax reductions will be received, even though my Budget is being presented two months or more after the start of the year. On this basis the income tax changes mean that for the married couple where the husband earns £100 a week, which is close to average earnings, there will be an increase in take-home pay averaged over the remainder of the financial year of over £4 a week. The increases in VAT and petrol duty will increase average family expenditure by about £2·75. So that, taking both the direct and indirect tax changes into account, the average family will be about £1·30 per week better off. Similarly,

where the husband earns £60 per week there will be a real gain of over 75p a week, while the position of the couple on £150 per week will improve by nearly £2 a week.

These reductions in the burden of income tax, which are as substantial as they are unprecedented, mean that wage and salary earners will have more money in their pockets to buy the goods and services they help to produce. True, the prices of a good many of these goods and services will be increased by my tax proposals. But we have done everything we can to ensure that every family in the land will have more money coming in to pay the increased bills. What is more, the choice of the way they spend their income will rest increasingly with people, and not with the Government.

These changes represent only the first stage in the major reduction in the burden of direct taxation that we are determined to make. I emphasise this point particularly for those who will be involved in pay bargaining in the year ahead. Take-home pay will be substantially increased by these unprecedented cuts in income tax. This will more than make good the price effects of higher spending taxes. Any further attempts to cover those price effects by higher pay claims will be utterly self-defeating. The money will simply not be there to finance higher pay as well as lower income tax. Any attempt to have it both ways will simply end up by threatening jobs and putting firms—on which jobs depend—out of business. That is why it is so important for this Budget to be considered as a whole.

I have stressed the urgent need for new policies to reverse the decline of the British economy. These policies start with our conviction that it is people and not Governments who create prosperity. This Budget seeks to reduce the role of Government. Government will spend less, Government will borrow less. This will lay the foundations for controlling inflation.

In today's world, higher prices for oil and petrol are inescapable. So, too, in the short run, are the consequences of the inflation that has afflicted us for so long. Until that is controlled, some check to the growth of output and employment is unavoidable.

That underlines the other half of the Budget strategy. It is not a give-away Budget. Indeed, it is not in the power of the Government to give anything away. However, it is an opportunity Budget. The shift from taxes on income to taxes on spending will widen choice and improve incentives. Above all, it will enlarge opportunities.

The Budget is designed to give the British people a greater opportunity than they have had for years to win a higher standard of living—for their country and for their families as well as for themselves. I dare to believe they will respond to the opportunity that I have offered them today.

Mr. Deputy Speaker: Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate. When that matter has been disposed of, I shall call on the Chancellor to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the debate on Monday, and they will then be decided without debate.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,

That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

(a) Value added tax (Motion No. 2).
(b) Hydrocarbon oil etc. (Motion No. 3).—[Sir Geoffrey Howe.]

put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but, without prejudice to any authorisation by virtue of any other Resolution, this Resolution does not extend to the making of—


(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax;
(iii) for reducing the rate at which tax is for the time being chargeable on any supply or importation otherwise than by reducing that rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or
(iv) for any relief other than relief applicable to goods of whatever description or services of whatever description; or

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable.—[Sir Geoffrey Howe.]

4.45 p.m.

Mr. James Callaghan: Any Chancellor of the Exchequer occupies one of the most onerous positions in government. The present occupant, like his predecessors, is one of the loneliest figures in the Cabinet. Usually he has only the Chief Secretary to defend him when all the interests of his other colleagues are pointing in the direction of more spending—irrespective of how far they have come along with him on this occasion. Therefore, the Chancellor is deserving of the understanding of the House in the task that he has to perform.
It is customary to congratulate the Chancellor upon the manner in which he has prepared and delivered his Budget. I believe that, now and again, it has even been possible for an Opposition Front Bench speaker to congratulate the Chancellor on the substance of the Budget. However, I fear that I shall not wholly be able to do that this afternoon, but I do, with pleasure, compliment him on the lucidity, clarity and shortness with which he has presented it. The House appreciates shortness on these occasions.
He presented an extremely full and comprehensive Budget which will undoubtedly set the pattern for the next few years for the British economy. To do that is an ordeal which, perhaps, is appreciated most by those who have been through the fire. I agree with him that when he has had a few weeks only to grapple with the material the task is that much harder. Of course, he will be fully blooded only when he has got his Finance Bill through Third Reading.
I beg the right hon. and learned Gentleman to beware of the plaudits that the press will heap upon him tomorrow. I have seen how rapidly the garlands fade. I have no doubt that he will be greeted, as he was this afternoon, with great enthusiasm—with greater enthusiasm by the newcomers to the Conservative Benches than by those who were here in 1970. I shall return to that point. After 24 hours of favourable publicity—this applies not only to him—the rot sets in. He will find that the defects of the Budget will loom larger and that the virtues will be forgotten. Before the garlands fade, let me mention some of the things of which my hon. Friends and I heartily approve.
There was reference to the European Community budget. The Chancellor has the full support of the House on the question of reducing Britain's contribution. The Labour Government pursued that. I believe that the time is now more favourable—as I have said on earlier occasions—for pursuing that purpose. I hope that the Government will take full opportunity to pursue that. It may be that if the Chancellor is unable to secure the reduction by negotiation, one of our ideas will have to be taken up—a firm decision will have to be taken by the Government. The Government may have to put a ceiling on the contribution that they are ready to make to the Community budget, and to announce that they will do so. I do not suggest that they should do so until there have been the fullest negotiations on the matter. I believe that the time may come when that idea should be put into operation. That is the first thing of which we approve.
Second, I approve of the Chancellor's proposal to increase pensions and other social security benefits, including that for the single-parent family. However, we regret and will oppose the Bill that is introduced to limit the increases in pensions only to price movements. The whole purpose of this reform, which was introduced by the last Government, was to enable the ordinary pensioner to share in the increased prosperity of the wage earner. That was why the pension was fixed to be adjusted according to the increase in prices or the increase in earnings. I am afraid, therefore, that we shall be able to give only halfhearted approval in this direction.
We approve of the doubled relief on tax thresholds. We believe that that is something that could and should be done, and we think that the Chancellor was right to do it.
I referred to the enthusiasm of the newcomers to the House when the Chancellor sat down. They waved their Order Papers. Perhaps the enthusiasm was not quite as strong among the older Members. One is struck by the similarity of this Budget to that of 1970. The basic rate of income tax then was reduced by 2½p. Prescription charges were then put up. There seems to be a certain similarity with what is proposed today. The cost of school meals went up, industrial investment grants were cut, company taxation was reduced and London commuter rail fares were increased. So the whole programme today is unfolding as it unfolded in 1970.
In that Budget the lame ducks were to be strangled and rents and rates were increased through cutting subsidies. All the things that the Chancellor has today told us were tried in 1970 for the purpose of reviving the lack-lustre performance of British industry. This, then, is like the rerun of an old film—and we know how the old film ended. It ended in December 1973 with tax increases, but I will not go through the entire panoply of events that took place in that period.
The Chancellor is therefore embarking upon a colossal gamble this afternoon. It is a gamble that is almost equivalent to a man robbing the gas meter in order to put his money on a horse that he is not even sure will run and that he has seen fail in its previous outings. I do not have confidence that the right hon. and learned Gentleman's prescription—what he called the keystone of his policy, a reduction in taxation—will achieve all the wonderful virtues that he has outlined to us.
The other point that occurs to me immediately is the cavalier manner in which the Chancellor treats the increase in the retail price index. One would almost think that it had ceased to matter. We are told that 3½ per cent. will go on inflation as a result of the VAT increase, a quarter per cent., which will be a half per cent. by the time it has worked through, on petrol duty, and that other increases will arise out of the cuts that he is making in services, especially in the


public industries, that are bound to feed through into the retail price index.
I must press the Chancellor on one point that I am astonished he did not explain. What is his estimate of the increase in the retail price index? Where does he think it will be by the end of this year? I make my own rough calculation. It was our view, when we left office, that as a result of what was happening in terms of commodity price increases, oil price increases and earnings increases it might rise to about 12 per cent. by the end of the year. These are factors that the right hon. and learned Gentleman should be taking into account. He is operating against a most unfavourable international background—

Mr. Denis Healey (Leeds, East): The figure is 16 per cent. It is in the Red Book.

Mr. Callaghan: I am grateful to my right hon. Friend.
The Chancellor will be entering, in seven weeks' time, upon a new pay round without any guidance as to what he thinks should emerge, except that the public sector will pay what the Government can afford, whatever that means, and that in the private sector the negotiators will go for what they can get. If the Chancellor believes that in 12 months' time he will be able to stand at the Dispatch Box and defend that policy, he is more naïve than I thought him to be.
I am grateful to the Chancellor for having sent us the Financial Statement and Budget Report. My right hon. Friend the Member for Leeds, East (Mr. Healey) says that the figure is in the document. The Chancellor did not give it, so perhaps I may. It says that the retail price index, between the third quarter of 1978 and the third quarter of 1979, will be increased by 16 per cent. That will be by the third quarter, not by the end of the year. There will be more to feed through after that. I had intended to give an estimate of 17 per cent. by the end of the year. I reckon that I shall not be far out. Indeed, I may be my usual moderate self on this.
Does the Chancellor truly believe that, whatever he says and whatever sermons

he preaches, the trade union conferences and negotiators will be able to go into the next round with no guidance and claim on behalf of their members anything less than the increase in the retail price index? Of course they cannot.
We were brought down in the end by the fact that we were over-ambitious in trying to reduce the retail price index to 5 per cent. by the end of 1980. It is clear that that gave rise to last winter's troubles. That was the beginning of them. But I would sooner fail on the basis of trying to get the retail price index down to 5 per cent. by the end of 1980 than enter on the next pay round informing the workers of this country beforehand that they will start on the basis that they can anticipate that the index will be going up by 16 per cent. within the next four months and by much more by the end of the year.
If the right hon. and learned Gentleman is relying, as are some of his Back Bench supporters, on tax cuts to ease the wage claims, they have learnt nothing from our experience. Tax cuts last year amounted to £2·4 billion. What was the response to that of the Prime Minister, then the Leader of the Opposition, speaking from this Dispatch Box? She said "£2·4 billion? That will be eaten up by inflation during the coming year". I can tell her and the Chancellor that his tax cuts will be eaten up by inflation within the next six months. I am bound to say that one of the classic parliamentary phrases that will go ringing down the pantheons of time will be his immortal words "I am putting more money into their pockets so that they may pay the value added tax".
I shall not go into the impact of the value added tax or of those other imposts that are proposed on those who will not benefit from tax reliefs. I am most grateful to the Chancellor for increasing pensions. That was the least he could have done in that area.
But what about the low-paid workers? How will they benefit? I am speaking of those who are not subject to tax or who are paying very little. It is upon these people—and let us learn from our own errors and our past mistakes—and it is upon their claims that the whole of the incomes structure and the structure of wage claims is built. Trade union negotiators will, in the next few months, base


their claims upon the lowest paid. It is the lowest paid who we will not be able to prove are getting benefits out of this Budget Indeed, they are suffering severe burdens. I merely add on the industrial side that I am astonished that at a time when the Chancellor claims he is putting a lot of money into people's pockets it should be estimated—he estimates—that there will be no increase in output during the coming year. If that is so, what is all that money to go on? It is to go on imports. Is that where it is supposed to go, or is he hoping that it will all be saved?
Here we are with the basic weakness. I do not disagree with the Chancellor's analysis, the familiar litany that we heard at the beginning of his speech, which has been preached by every Chancellor—and I have heard 13 in this House-on the need to increase the productivity of British industry or the need to meet the needs of our overseas customers and all the rest of it. Does he really believe that the lack-lustre performance of British industry will be overcome by a reduction in income tax of 3p? If he does, he is living in a world of wonderland.
The plain truth is, as I have said many times from that Dispatch Box—and I have no reason to change my view now that I am here—that it will be a long job for Britain to overcome its deficiencies. Of course taxation has a part to play; nobody denies that. But I deeply regret that the Chancellor had not one word to say about the industrial strategy. Tories used to jeer at it, but now that they are on the Government side of the House I had hoped that they might have some words to say about it, because they will not succeed until they can secure the total co-operation of workers and management of this country, working with industry through the working parties which were set up. In other words, they must preach in every factory the moral that the Chancellor preached today. If the right hon. and learned Gentleman really believes that by raising the minimum lending rate to 14 per cent. he will encourage industrialists, who will now be paying 17 per cent. or 18 per cent. for the money that they borrow from the banks, that, too, is an astonshing phenomenon.
I am grateful for what the Chancellor said about the work of my right hon. Friend the Member for Leeds, East.

What I said about the Chancellor's burdens applies equally, if I may say so, to the burdens of my right hon. Friend, who carried us through a very difficult time. That was a time of world recession in which oil prices had increased fivefold. At that time we protected those who were in need and those who were sick. We did not visit the consequences of tax cuts, or our difficulties, on them, and I am grateful for the work of my right hon. Friend, as I am grateful for what the Chancellor has said.
This is not the Conservative Budget that was promised on 24 April, the Budget that would raise production and bring real prosperity. It has nothing to do with that. This Budget is unfair in the distribution of reliefs, unjust in the additional burdens that it imposes, inflationary in its effects on costs and prices, and a reckless gamble with our economic future.

5.4 p.m.

Mr. Geoffrey Dickens: Mr. Deputy Speaker, I crave the indulgence of the House for my maiden speech. I was sad to hear the Leader of the Opposition make fun of the new Members and their enthusiasm in waving their Order Papers because they approved of the Budget. It is because we new Members have arived in Parliament that the Prime Minister and the Chancellor of the Exchequer have the opportunity of a new beginning for this country. This Budget laid the foundations for that today.
I start by paying tribute to the man I succeeded, Kenneth Lomas, who served the House of Commons and the constituency of Huddersfield, West, in West Yorkshire, for 15 years. He commanded the respect of all political parties in my constituency for the sympathetic way he understood the problems of that constituency and for the way he dealt with those problems. I am pleased to follow him, even though he sat on the then Government Benches. He did a thoroughly good job. I am sad to say that he has not enjoyed the best of health for a number of years. He has just had his fourth operation. It will interest the House to know that unfortunately his wife, Helen, was recently taken seriously ill. I am sure, Mr. Deputy Speaker, that you and Members of the House will wish to join me in sending our good wishes for better


health and for their continued happiness to both of them.
I should like, if I may, being the first Conservative Member of Parliament for 100 years to serve Huddersfield, West, to briefly to describe my constituency. It is a very busy, bustling town lying, like many West Yorkshire towns, within a valley close to the Pennines and close to the Derbyshire Peaks. It serves the world extremely well through its textile industries. These have been established in Huddersfield for generations. If any Member is wearing a suit of Huddersfield cloth, he is travelling first-class, because the woollen worsted materials of Huddersfield are recognised to be the finest materials in the world.
The textile industry—not only the weavers but also the yarn spinners and dyers, and all the small businesses which trade with the giants—is the largest employer in the Huddersfield area. We also have many engineering giants as well, which produce valves for power stations, gear boxes, environmental plants and drilling equipment. The area has a wealth of engineering, and Huddersfield, as I am sure the hon. Member for Huddersfield, East (Mr. Sheerman) will agree, is a town that can take off again very rapidly because we now have the benefit of the M62 and Ml motorways. They provide us with very good communication links, and I am sure that Huddersfield will once more be one of the most important towns in Yorkshire. I am honoured to be one of the two Members of Parliament to serve the town.
The small businesses play a very important part within the constituency, as they do in most other constituencies. They are very big employers and we rely greatly on them. However, Huddersfield enjoys fame in other spheres. We have the Huddersfield Choral Society, known throughout the world, and we produced Anita Lonsborough, the Olympic gold medallist, as well as Derek Ibbotson, the mile world record holder. We also won the first division of the Football League for three consecutive years. I was not born at the time but we did it. It would be unfair if I did not say that the right hon. Member for Huyton (Sir H. Wilson) went to school in Huddersfield, so I will be fair and say it.
There were certain omissions from the Budget which disturbed me. I am sure they also disturbed the ratepayers of the United Kingdom and the ratepayers of Huddersfield in particular. In the 1970 general election campaign the Conservative Party campaigned very forcefully for the abolition of the domestic rate. We felt, quite rightly, that it was an unjust and unfair rate to levy on our people. It is unjust because there are elderly people, perhaps widowed, living in accommodation which may have a larger roof than that of the house across the road. Perhaps such people have full central heating and have to pay a very big share towards local government finances. Yet across the road we have the slightly smaller house with perhaps six wage earners living there and only one of them making any contribution towards local government.
The present system cannot be fair and it cannot be just. Already we are hearing rumblings about the water rates that are being levied. There are instances of seven people using water and paying less than one dear old lady living on her own who uses only one-seventh of the water that they use. That cannot be a fair system, yet nothing has been said about it in the Budget Statement today.
I fully understand why we have been unwilling to raise the question, since we are committed to reduce taxation and, naturally, if we collect local revenue in any other way it must be done either through a local tax or through direct or indirect taxation of some kind. Nevertheless, it remains a burden, and I imagine that local councillors will probably face a big problem when this subject comes up again because they fear that if rates are collected nationally they will not be able to call the tune locally.
I believe, however, that local councillors who hold that belief are wrong. For example, many right hon. and hon. Members have experience of parish councils precepting the district council, and the system works very well. The parish still makes up its mind on where it will spend the money and what its priorities shall be. I do not, therefore, feel that we need worry too much about that. I think that local councils will still be able to say how the money will be spent and what the priorities should be.
It remains my firm conviction, however, that what we must move towards is a just and fair system. We owe this to the ratepayers. We in the Conservative Party in particular owe it to the ratepayers because we have encouraged them to believe that it is something for which we stand. As I say, I understand why there has been no mention of it in the Budget today, and I do not wish to detain the House on this occasion, but hon. Members can be assured that they will hear from me again on the issue. Although there has been no reference to it today, it is an issue on which I have campaigned and shall continue to campaign because I regard the present system as totally unjust and unfair.
I thank right hon. and hon. Members for their attention.

5.11 p.m.

Mr. Ken Eastham: I am grateful for this opportunity to make my maiden speech, although, obviously, since I sit on the Opposition Benches, I shall not put quite the same interpretation on today's events as did the hon. Member for Huddersfield, West (Mr. Dickens) in his maiden speech.
I have the honour to represent the northern area of Manchester known as Blackley. It is a traditionally sound area with its people drawn from the professions and the artisan skills. As a new Member for part of Manchester, I am delighted to say that, although the Conservatives claimed many times during the election campaign and afterwards that the nation supported them, this proved not to be the case among Mancunians, who, with their good sense, stayed solid in support of the Labour Government and the Labour Party.
A great deal of sterling work was put into the election campaign, and I know that the House will allow me to pay tribute to the workers in the Blackley constituency. In particular, I mention my agent, Mrs. Alison Kelly, a lady of great reputation in the Manchester area, and I pay tribute to the solid work which she did. I am much indebted to Mrs. Kelly for the support which I had during my campaign, just as I am indebted to the other workers who also contributed to such an outstanding victory in the general election.
I feel that I should pay tribute also to the new Under-Secretary of State for Education and Science, the hon. Member for Brent, North (Dr. Boyson), because he chose to visit the constituency during my campaign. He is not someone really well thought of in education circles in Manchester, and he may well have contributed to my success. Perhaps, when we fight the next election campaign, the hon. Gentleman could be invited to come to my constituency on two occasions instead of one. I am sure that that would help us in Manchester, as I believe it did just recently.
I pay tribute also to Paul Rose, my predecessor as Member for Blackley. When Paul Rose was elected as Member for Blackley in 1964, he was at that time the youngest Labour Member of Parliament. He enjoyed a fund of good will and respect among all right hon. and hon. Members. He took a stand on many vital issues, being well known for his positive attitudes on such questions as Rhodesia, Northern Ireland, racialism and Fascism. It was a sad day for Blackley when Paul Rose decided not to stand again, due to illness, and I know that the good wishes of all Mancunians will be extended to him, with a debt of gratitude for the vital work which he did and the contribution which he made to the life of the city of Manchester.
I cannot pay the same glowing tributes to the Chancellor of the Exchequer for his Budget as the hon. Member for Huddersfield, West felt able to do. As I see it, the rich will get richer and the poor will get poorer. There is no doubt about that. It is a fact of political life—I have pointed this out in many public speeches in the past—that the Conservatives fight elections not to do more but to do less, and the consequence is that they lower the quality of life.
We see already what is in store through cuts in public expenditure. I think in particular of curtailment in local government, and I foresee dire consequences for many things which go to the standard and quality of life of our people. Having been a member of the Manchester city council for 17 years, I have gone through some of these episodes many times in the past when, at the direction of the central Government, cuts have been made in local government services and funds.


Immediately, there are grave consequences. Local government is labour-intensive, so the first natural consequence that comes to mind is an inevitable loss of jobs.
Perhaps I may be permitted to quote the words of a former distinguished Member of the House, and a great friend of mine, Will Griffiths. He told me once of an occasion when he visited America. He said "There is great wealth there, without doubt. People live in big houses, and there are three large cars to be seen outside almost anybody's front door, but if you look round the back there is a mass of garbage spilling over because local government money is not being spent to improve the quality of life" It is that kind of order of priorities that we see when expenditure is curtailed.
For a number of years I have been interested in education in my own city, and I noted during the election campaign that Conservatives talked about our standards of education not being high enough. Education also is labour-intensive, and I do not believe that standards of education will be improved when the instruction goes out to curtail expenditure. This is one area which will immediately suffer, and suffer seriously.
We should remind ourselves also that local authorities programme their building schemes on a three-year cycle, and projects which were planned three years ago will now just be coming to fruition. If they are coming to fruition and the instruction goes out that no more money is to be spent, what will be the result? If local authorities are not to have the manpower to open new schools or welfare service establishments because they cannot afford the people to operate them, they cannot provide the services which people need. That is the logical conclusion that I forecast.
We shall soon see unemployment soar. Any balanced and sensible Government should be thinking about creating more jobs, not fewer jobs. Will there be consultation with and protection for organised labour? The trade union movement has been saying for many years that we should be thinking about reducing the working week to 35 hours. Such a reduction would create more jobs. We pride ourselves on so-called efficiency, but often the result is a loss of jobs.
The unemployed have to be fed and clothed. They still have to be provided for in society. However, we are told that they must be unemployed, and that is the consequence of the Budget. It is a Budget that will eat away the seedcorn of the nation's future. I can forecast only that we shall be heading for a grave disaster.

5.22 p.m.

Mr. John Townend: I congratulate the hon. Member for Manchester, Blackley (Mr. Eastham) on his maiden speech. I only hope that I manage to cross the hurdle as well and as satisfactorily as the hon. Gentleman. I also thank you, Mr. Deputy Speaker, for allowing me to catch your eye on Budget day. It will certainly make by birthday this year a very memorable occasion. I have been impressed with the staff of the House and with the friendliness shown to new Members by Members on both sides of the House.
I understand that it is the tradition in a maiden speech to pay tribute to one's predecessor. No doubt that is easier in some instances than in others. I am fortunate in that respect as my predecessor, Richard Wood, was much liked and respected throughout his constituency. In the few weeks that I have been in the House I have found that these feelings are shared by Members on both sides of the House. He had an excellent war record but was unfortunately severely disabled by the loss of both legs. A lesser man would have retired to his beloved Yorkshire countryside. Richard made light of his disability to such an extent that many people in his constituency thought he had lost the use of only one leg.
Richard Wood entered Parliament as the first Member for the new constituency of Bridlington in 1950. The son of a former Foreign Secretary, he obtained high office, serving as Minister of Pensions and National Insurance, Minister of Overseas Development, Minister of Power and as a member of the Privy Council. By his example he has been a constant inspiration to the disabled throughout the country to overcome their disabilities.
I am grateful for the kindness and friendship Richard Wood has shown me over the past six years. He is indeed a fine English gentleman and I am sure


all hon. Members will join me in wishing him every success in his new business venture, which involves providing employment for disabled people.
I consider myself fortunate to have succeeded Richard Wood and become the Member for Bridlington. It is without doubt the finest constituency in the country. It is one of the longest constituencies in England, with a coastline 70 miles long, and at the centre where I live it is only two miles wide. Tourism is an important industry and Bridlington is one of the finest resorts in the country. I cannot say that it is the finest resort—if I did I would upset my constituents in the delightful seaside towns of Filey, Hornsea and Withernsea.
Agriculture is our most important industry. In Holderness we have some of the most fertile and productive land in Britain. It is said that we have more pigs than people. However, that will not continue unless the Government act quickly to enable our pig farmers to compete on equal terms with the pig farmers in the EEC. To do that they will have to obtain the reform of the method of calculating MCAs, which is heavily biased against the United Kingdom producer.
We have an important and growing inshore fishing industry and we are looking to the Government to maintain the 12-mile exclusive limit and obtain preferential limits up to 50 miles.
Apart from the large BP chemical plant, we depend for employment in the Bridlington constituency on small businesses. We have a very high level of unemployment. I welcome the measures proposed today by my right hon. and learned Friend the Chancellor of the Exchequer to encourage the expansion of small businesses. I am particularly pleased with his taxation proposals. The Budget is bold and imaginative. As the Chancellor said, it is only the first step in a fundamental change of direction. If it does not encourage the entrepreneurs, the small and medium-sized business men, to invest and provide more jobs, nothing will and Britain's future will be bleak.
I welcome my right hon. and learned Friend's undertaking to reform the capital gains and capital transfer taxes, which weigh so heavily on small businesses. If we are to solve our unemployment prob-

lem in Bridlington, the Government will have to take action to change the farcical situation where Bridlington, with an unemployment rate of twice the national average, is not a development area but is surrounded by the development area of Scarborough and Hull, with a much lower unemployment level.
Although I fully support the Government's proposals to cut public expenditure, I welcome their emphasis on the protection of the realm. I support the increased expenditure on defence. There is, however, one aspect of the protection of the realm that seems to have been ignored, namely, the prevention of parts of our country from disappearing by being washed away. Coast erosion is a major problem in my constituency. On the Holderness coast over 2½ metres of land are lost every year. Nothing has been done to protect the coast in rural areas. Responsibility for coast protection comes within the 1949 legislation and rests with the maritime district council, in my constituency principally Holderness but to a lesser extent North Wolds. Holderness is a small rural district council with a low rate base and it cannot possibly contend with the problem.
Government grants are limited to protection works in urban areas because the Ministry considers that coast protection of agricultural land is not cost effective. That might seem logical to a bureaucrat sitting in an office in London. However, if a farmer sees some of his best land disappear every year into the sea it is a different matter. The loss is cumulative every year. In my constituency we are losing 30 acres a year.
There are two additional danger points that the Ministry does not seem to have taken into consideration. At certain points along the coast, at Sand-le-Mere, Kilnsea and Barmston, where the hinterland is below the high-water mark, there is a dange of the sea breaking through. As the fall of the land is inland, that could result in thousands of acres of good farm land being flooded. That would be serious for many fanners who could be put out of business and it could result in a substantial loss of food production.
If the land flooded by salt water were subsequently redrained, it would cost a lot of money to bring it back into production. The Yorkshire water authority is responsible for building the flood


banks, but that is only a short-term palliative because they in turn will be washed into the sea.
The second danger point is at Spurn peninsula at the mouth of the Humber where the sea defences were maintained by the military until the early 1960s. Since then they have been allowed to fall into a state of disrepair. At Spurn there is imminent danger of the sea breaking through the narrow land and turning Spurn into an island. That could result in the mud flats that protect the flood banks on the northern banks of the Humber being washed away with, again, flooding of thousands of acres of good agricultural land. More important, it could affect the navigation in the Humber and, consequently, the port of Hull.
The Humberside county council, of which I was the leader, approached the previous Government and invited the hon. Member for Manchester, Gorton (Mr. Marks), a Minister in the previous Government, to visit the area and see the problem on the ground. We thought that it would be advantageous if he saw the problem from the air. We hired a helicopter. Unfortunately, as often happens in the United Kindom, the weather was appalling and the helicopter could not get off the ground. Therefore, the Minister was not able to get a bird's eye view.
The protection of our coast is not a local problem; it is a national problem. It should be financed by the Government. Small rural maritime districts do not have the resources to deal with it. It is ridiculous that flooding caused by coast erosion is dealt with by the water board, yet coast protection is dealt with by the district council. The responsibility should be with one body, the national Government. Immediate action must be taken at Spurn, to protect the prosperity of Hull. The long-term problem could be solved if we reclaimed the land inside Spurn Head. That would provide several thousand additional acres of agricultural land. If this had been Holland, that would have been done 30 years ago.
Action must also be taken where the hinterland is below sea level. I am the first to admit that there is no easy answer to this problem. But it would be money well spent if some of the Government's oil revenues could be spent on more widespread experimental work and on non-

traditional methods of coast protection, which could have national implications and, if successful, would be more effective than traditional methods.
There is one certainty. We shall not obtain any more land as a commodity. Let us guard what we have. It is precious.

5.34 p.m.

Mr. Allan Roberts: It is a great honour to be making a maiden speech in the House of Commons.
First, I should like to refer to my election campaign. It was fair as far as the Conservative opponent was concerned. However, it was marred somewhat by the importation by the Liberals of a nephew of the retiring Member of Parliament, Mr. Simon Mahon. If Mr. Mahon were here, he would be equally strong in rejecting the idea of nepotism. Nepotism would not be accepted by the people of Bootle. Mr. Mahon owed his success—as did I at this general election—to the people, the Labour Party and movement and the loyal Labour voters of Bootle who returned him as Member of Parliament on many occasions from 1951 onwards and who returned me with an overwhelming majority. That was a good result for the Labour Party in Bootle.
I pay tribute to Simon Mahon. I shall continue the work that he did in the constituency. If he were here today, he would agree that we both owe everything to the Labour movement and the Labour voters in Bootle.
My constituency has many problems. Their resolution will not be helped by the speech of the Chancellor of the Exchequer and the consequences of the Budget. If I look at the situation in Bootle in the light of the Chancellor's speech, perhaps hon. Members may realise what I have in mind.
Nationally, there are about 1½ million people unemployed. The facts in Bootle and Merseyside are far more serious than the national figure indicates. Bootle is characterised by a strong dependence upon the port, which has been declining for a considerable number of years. There is a weak manufacturing sector in Bootle and on Merseyside. Unemployment among active males in the constituency is between 12 per cent. and 14 per cent. The majority of the unemployed unskilled men are


not benefiting from any expansion which has taken place in white collar employment in central Bootle in the past 10 years.
Between 1961 and 1971, the population of the inner part of the city—the major part of my constituency—declined by 24 per cent.;15,000 people left the area as there were no employment prospects. Only 5·3 per cent. of the economically active men in the area between the ages of 17 and 65 are in the professional classes, about 24 per cent. are unskilled manual workers, 74 per cent. of the house-holds do not own a car, and 21 out of the 24 primary schools are classified as social priority schools.
It is obvious from those statistics that there is a great deal of deprivation in the area. Many people receive unemployment benefit and social security payments and are on low incomes. Not one of them will benefit from the Budget. They will suffer considerably in a number of ways. First, industrial and employment subsidies will be cut. No doubt the Secretary of State for Industry will say whether Merseyside will retain its development area status. Nationally as a result of the Budget we shall lose £380 million, which would have gone directly to support and help and create jobs that were provided by the previous Labour Government.
The people of the area are sick and tired of politicians in London and else where blaming Merseyside's problems on the militancy of the trade union movement and the work force. The militancy occurs as a consequence of the problems and unemployment—and not the other way round. The unemployment and the problems came first.
In the early 1970s, Liverpool saw the continuation of the trend of the previous decades in declining job opportunities in the city. Over the 10 years from 1961 to 1971, 75,000 jobs were lost from the city and 19 per cent. of the local work force left Liverpool. That dramatic decline was halted only temporarily by the national economic boom of 1972 and 1973. Further substantial losses have been recorded since then, according to the planning officer of the city of Liverpool.
I come to the Government's cut of £440 million in the environment programme. When the Chancellor announced that he would repeal the Community Land Act

and that that would save money, and spoke of the water authorities and cuts in housing, Government supporters cheered. They especially cheered the announcement about the Community Land Act. The budget for the Community Land Act in this financial year is only £54 million. Of the £440 million to be cut from environmental expenditure, only £54 million can be taken from the Community Land Act—and that will happen if everything in the pipeline is stopped and no more loans sanctions are given.
From where will the £440 million come? Not from Community Land Act expenditure. It will come from the water authorities and housing. There is provision of £478 million in this year's Budget for the water authorities. Before the Budget, local authorities and regional water boards had been instructed to stop letting out capital contracts. What will happen? The water rate will go up over and above the 3½ per cent. increase in the cost of living resulting from the VAT increase.
;
There is underground dereliction in the North-West. Merseyside and Manchester are ignored. Sewers are already collapsing. That problem must be dealt with. Proposed industrial development and housing schemes, either for sale or rent, will not be able to go ahead as the water authority must not let the capital contracts to provide the infrastructure and drains.
Then there is housing, with £1,500 million revenue spent this year and £2,146 million on capital. That is where the cuts will come. In addition to the increase in VAT and rents going up, housing programmes will be halted. Council houses will not be built. How can this help the people of Bootle, the people of Merseyside, the people in industrial areas, who are on waiting lists? These people will face a terrible situation.
Then we have the bank rate going up from 12 per cent. to 14 per cent. That will hit small businesses. It will also hit the owner-occupier with his mortgage. I do not know how the so-called enforced sale of council houses will be funded. How will local authorities lend the money when they are having to borrow it at more than 14 per cent.? No one will be able to afford to buy a council house. That is the position before the new policy is even introduced.
There will be more cuts. The Chancellor of the Exchequer said so. I urge all Labour local authorities, wherever they are in the country, to levy a supplementary rate now. I urge them not to wait until next April, when the Chancellor's Budget has been forgotten and the voters might blame the Labour councillors. I advise them to put on a supplementary rate now. Every Labour councillor in the country should tell the people in his area that it is the consequence of the Chancellor's budget, and that the authority intends to raise the money now so that the house-building programme and the essential social services may be maintained. The people in areas such as Bootle need these services because they are on low incomes and are entirely dependent on the social wage. They cannot afford to pay for their use of the Health Service, or for their housing, without help from the Government.
I am very concerned about the drift towards the means-test State. I am by profession a social worker. I am probably the first social worker, if not one of the first social workers, by profession to be elected to Parliament. I believe that in that respect I have some responsibility for fighting in this House for the deprived, for the underprivileged and for the very people who were stigmatised during the election campaign by the right hon. Lady who is now the Prime Minister. These are the people to whom Conservative Members refer so easily and so glibly as the scroungers.
I have the duty as a social worker to fight for the people who represent minority groups in our society. I am a member of the British Association of Social Workers. I pay tribute to the work that social workers do, and I shall fight on behalf of the underprivileged. The underprivileged will not benefit from measures designed to shift the burden of taxation from direct to indirect taxation. The very idea that this shift will give more freedom to poor people to decide how to spend their money when they have no money to spend anyway is absolute nonsense. The widow, on a pension, buying something in the shops, pays the same amount of VAT as a millionaire buying the same product. It is absolute nonsense to talk about giving people more freedom.
The Tories intend to increase the cost of housing, prescription charges and so on. Instead of giving a universal benefit and providing everybody with a subsidy, their intention is to put up the charges and then to tell the people who are in need that they can fill in a form in order to apply for a rebate, and fill in a form in order to have an annual means test. It is annual financial striptease that these people are being asked to undertake. This must be fought on behalf of the people who are underprivileged, the people who are in need and the people who often do not get the benefits and rights to which they are entitled.
Bootle is a Labour constituency and the problems of my constituents are not helped by the fact that it is situated in the metropolitan district of Sefton, which seems to be permanently Tory-controlled. The area includes Crosby, Formby and Southport. We have in Bootle government from Southport. The Southport Conservatives are so Rightwing that they make the Stockport and the Tameside Conservatives look like Communists. I do not know why Stockport and Tameside get all the publicity and Sefton does not. It absolutely amazes me. I shall fight in this House to stop government from Southport and to get a change in local government boundaries, so that the people of Bootle and Litherland, the area that I represent, can have their own council back and decide their own future for themselves.
The hon. Member for Brent, North (Dr. Boyson) once said that the increase in crime was in proportion to the increase in the number of social workers. There is one fewer social worker since I was elected for Bootle, so the crime rate should go down.

5.45 p.m.

Mr. John Stokes: I congratulate the four maiden speakers who have spoken in the debate this afternoon. Three of them observed the long-standing convention of the House that a maiden speech should not be controversial. The last speaker, the hon. Member for Bootle (Mr. Roberts), chose to ignore that convention. I admire and salute his sincerity and passion. In the nine years that I have been in this Chamber I have found that it is a kind and tolerant place. In


the end it is the sort of person that an hon. Member is that matters more than the party label.
I think that it is for the ease of everybody if those of us who are less senior than many others—and I am less senior than many others here—pay at least some attention to how affairs are conducted in what is, after all, the greatest debating Chamber in the world. I congratulate the maiden speakers on their confidence and fluency, and also on their devotion to their constituencies. I am glad that here we still have a close link between a Member and his constituency.
It is difficult, after such a Budget, full of meat, to review all aspects of it. I congratulate my right hon. and learned Friend the Chancellor of the Exchequer most warmly on his Budget. Representing, as I do, an industrial seat, composed mainly of people who work in factories, I know that they will be as pleased as I am with the emphasis in the Budget on the individual and on manufacturing industry.
I welcome the help for small companies, as I believe that it is from the small companies that the greatest contribution will come, in the end, to reducing unemployment. I am glad about the increases in pensions and the help for old people. I welcome the encouragement to savers by the improvement in the investment income surcharge—I felt that the previous level was most unfair—and also the ending of dividend controls, which were mischievous and quite irrelevant.
The cuts in public expenditure had to come. There is great resentment in the West Midlands at the shrinking of the manufacturing sector and the increase of the public sector. This Budget starts to reduce that imbalance. I felt that the whole tone of the Budget and its trend set the standard for the future recovery of our country.
I was disappointed that the Leader of the Opposition did not rise to the level of events. There was no apology at all from him for the failures of his own Administration, and his speech left a taste of sour grapes in the mouth.
We have this Budget in the last quarter of the century, when this old and great country of ours faces two supreme challenges. One, as we all know, is related to the loss of morale, or national pride, which has been continuing since the end

of the war, and which I believe will be redressed by the return of the national and patriotic party of this country. But to halt the decline in the economic performance of this country and to start building up our productive capacity will, I believe, take much longer than a five-year term of office. It will mean a complete change of attitude for many people.
Perhaps the hon. Member for Bootle will listen, if only to this part of my speech, because the transition will be painful for some people. I believe that we must instil into everyone—above all, into our young people—that their individual effort will count much more than actions by the Government. That is where the Budget will be helpful. It is on the actions and decisions of millions of ordinary people that economic success will come to this country. The Government cannot do it; individuals and firms can.
The stark fact—there is no disagreement between the two sides of the House on this—is that we are failing to produce either enough or with the efficiency and competitiveness which the modern world demands and in which France, Germany, the United States of America and Japan are so far ahead of us. That is why this country is now flooded with foreign goods, from cars to refrigerators and textiles. That cannot go on indefinitely without the country facing ruin.
The tax changes in the Budget will not alone suddenly transform the situation and improve the sluggish performance of our factories overnight, with their gross overmanning and underutilisation of plant and machinery, but they will at least be a start. They will be an encouragement to our directors, managers, foremen and chargehands to lead their workpeople better and to put them more in the picture about the aims and objects of their enterprise. They will encourage the skilled men, of whom there are many in my constituency and in the West Midlands, and they will encourage also young men and women to enter industry and consider learning a skilled trade. We must make the phrase "British made" once more the hallmark of quality and excellence. We have the brainpower. We need to harness it to commercial development and success.
All that I have been saying, and the theme of the Budget, is not sordid materialism. It is natural for a man to


want to work harder to give his children a better start in life than he had. Similarly, if a nation wants hospitals, schools, roads, city centres and social services, it can provide the means only from the wealth-producing sector of the economy—the products of its factories. These products must be well designed, properly made, produced on time, delivered punctually and, if need be, well serviced afterwards. If the French, Germans, Americans and Japanese can do that, there is no reason why we cannot. More of our young people should be encouraged to consider a career in manufacturing industry rather than in the public service. This is primarily a job for industry.
There remains the tremendously difficult problem, which has built up over many years in this country, of too many people, unfortunately, being employed in the Civil Service, both nationally and locally. I welcome the cuts in the Budget in this regard. They are essential to this country's health and well-being. It is no use the Opposition bemoaning the lack of jobs. Jobs which the nation can neither support nor afford are not real jobs. They merely camouflage unemployment. If our industrial base were to contract any more, we should have a rapid and disastrous decline in our standard of living and fearful cuts in all our social services.
This Budget, like the Government, supports industry, which supplies the life-blood for almost the whole of our national life. Within industry I include salesmen, both home and export, who are vital to our industrial success, and the service industries—banking, insurance and so on—which support them.
I believe that our industrial success as a nation will be helped if we denationalise some of the public corporations as rapidly as possible. I welcome the Budget proposals in that direction.
As a small business man before I entered the House and now, having previously been a manager in industry for many years, I know that it is the necessity to make profits and to avoid bankruptcy which supply the necessary disciplines to all ranks in industry. The absurdly high redundancy payments in the steel industry and in the docks, and the proposed granting of large increases in wages to miners, whose productivity is

falling, would be avoided—in the long run to the benefit of all concerned—if those organisations were responsible to shareholders for the success of their operations and had to show a profit at the end of the year.
Socialism has had nothing to offer industry. It only seems to reinforce failure and to bolster up what should be allowed to die. It also stifles invention and incentive. For 11 out of the last 15 years we have had a Socialist Government. I believe that they have held back the country grievously, and that is one reason why our industrial performance has fallen so far behind that of our competitors. I am grateful that the industrial heartlands of this country, such as my own, returned the biggest swings against the previous Socialist Government.
I hope that we shall see a faster dismantling of the various bodies—a matter touched on in the Budget—which presume to advise industry and, indeed, all of us. I see that the noble Lord Diamond's Royal Commission on the distribution of income and wealth has now gone. Good riddance. The whole thing was a complete waste of time and money to the tune of £1½n. If each day we can cancel one of these boards, we shall not only save public money and a great deal of time but release the men and women working for them into more profitable work and lift a burden which has been lying for too long on industry.
I wish that it had been possible in the Budget to reduce the borrowing requirement still further. We must get back to paying our way and balancing our budgets if we are to rid ourselves of inflation. I believe that inflation is caused by Governments. There is no other way to do it.
The increase in bank rate is harsh. It will affect small businesses badly. Nevertheless, it is essential as we were fast running into a dangerous period of inflation yet again.
The Budget will undoubtedly prove strong medicine for some. It appears to be strong medicine, as we have heard today from one speaker, but I believe that it is exactly the medicine that the patient needs.
This is probably our last chance as a country to pull ourselves together in 1979


economically, financially and industrially. We must learn to survive in a hard and competitive world. In the end, no one will help us but ourselves—certainly not the EEC. The world is now looking at us, at this Budget and at the House of Commons to see whether at last we really intend to turn the corner. I believe that we do. I have the utmost confidence that the Prime Minister, the Chancellor of the Exchequer and the Government will steer this great nation on to the high seas of success, where we can again earn the admiration of the world.

6.0 p.m.

Mr. Alfred Dubs: Thank you, Mr. Deputy Speaker, for giving me this opportunity to speak in the House for the first time. I hesitate to use the word "maiden" because there are some members of the women's movement in my constituency who query that adjective.
Many years ago, when I was canvassing during the course of an earlier election campaign, I rang the doorbell of a multi-occupied house and a lady and a small child of about four came to the door. I did not know who she was because the doorbells did not have names on them. I stated that I was canvassing, and the lady slammed the door in my face. As I was puzzling which name I should mark as being a supporter of the opposite party to my own, the door again opened, the lady with the small child was still there, and she said to the child "There is nothing to see. It is only a politician."
That comment set me thinking, over the years, whether we politicians—I presume I have now become one through becoming a Member of the House—have established the right level of credibility with the people whom we represent. If the people sneer at us and say "It is only a politician" and slam the door—I believe that was not an isolated reaction—we must be careful to ensure that we do not distance ourselves too far from the communities and the people whom we represent.
My predecessor, Ernie Perry, was a Member of this House from 1964 to 1979. He was undefeated throughout his series of election campaigns. He had been on Wandsworth borough council, had previously served on Battersea council—indeed, he had been a mayor of Battersea

—and whilst in the House was an assistant Government Whip. I also mention another previous Member of Parliament, Mrs. Ganley, born 100 years ago this year, who served Battersea, South from 1945 to 1951 and was an active Socialist and co-operator in the London area.
Battersea, South is a constituency which has suffered more than its share of boundary changes, and I suspect that it may indeed disappear when the next lot of boundary changes are announced in the course of, I believe, this week. Batter-sea, South has also suffered through being a typical inner city area. It has suffered from a declining population and the effect that that has had on local services. It has suffered because of the disappearance of much employment, and it is suffering so much because of poor public transport that one could almost say that the main occupation in Battersea, South is waiting for a bus, a tube train or a train.
As with so many inner city areas, Battersea, South has been under attack over the years. Perhaps a symbol of the attack on Battersea is what occurred as recently as last week to the mural on what was locally called "Morgan's wall" the remains of which can still be seen as one comes over Battersea Bridge. I appreciate that that it is not in Battersea, South. It is in Battersea, North. However, it has been a symbol of the whole community. It was a vivid mural, depicting the feelings of the people of Battersea. That mural was bulldozed at three o'clock one morning last week in order to prevent people knowing that it was happening. It was an act of stealth, and in some ways it symbolised the sort of attacks that are made on people who live in inner city areas.
I appreciate that one is not supposed to be controversial when making one's first speech in the House, but that is difficult if one has recently been elected in the course of a controversial campaign and when one represents a constituency in an area which has, perhaps, one of the most controversial local authorities in the country. I am speaking of Wandsworth council.
Wandsworth town hall is in my constituency, and since the Conservative Party won control last year Wandsworth council has been held up as the sort of


local authority which typifies, at local level, what the Conservative Party would wish to do nationally if it had the chance. Indeed, the Conservative Party now has that chance and we have seen, in today's Budget, how it intends to use it.
Before the Government get too excited about the opportunities that are ahead of them over the next few years, perhaps I could just comment that although there was a big swing to the Conservatives during the local elections in Wandsworth last year, there was a large swing away from the Conservatives in the general election. I doubt very much whether I should be here today had the people of my constituency not had the evidence before them of what happens when a council such as Wandsworth comes under Conservative control.
In terms of the Budget, I believe that many of the fundamental problems facing our economy have not come to light over the last few years, or, indeed, the last 25 years. Many of the real problems facing our economy have been with us for 100 years or longer. What we have seen is a steady trend of events which have weakened our economic position as a country on a long-term basis. Therefore, I should like to make a judgment of the Budget both in terms of its short-term effects on the people in my constituency, and others, and in terms of whether it will make a long-term contribution to the real problems that affect the British economy.
Without wishing to enter into any area of controversy, I do not see that this Budget will do much for people of the inner city areas such as Battersea in terms of providing more jobs or making it possible for local authorities to improve housing conditions, or, indeed, that it will do anything significant about achieving economic growth, which I believe is the key to creating more jobs. I find it difficult to see how our long-term economic problems will be solved unless one Chancellor or another introduces a measure of import control to make possible the more rapid economic growth that will give us more jobs and the prosperity that we have long been seeking.
Both in the short and long term I do not see this Budget making a significant contribution to solving the overall prob-

lems facing this country, though it may well help certain sectors—usually the better off—within it. I fear that by this time next year we shall see increasing levels of unemployment, inflation and imports, and the sort of debate that we shall have a year from now will be very different.
It was said this afternoon that one of the underlying philosophies of the Budget was freedom of choice. It has always been my understanding that there is not, as it were, a sum of freedom which can be increased or diminished. The truth is that there is more freedom for some and less for others. The real issue is how widely the freedom of choice about which the Government talk will be distributed. It seems to me that giving more freedom of choice to, say, certain council tenants to purchase their council houses will lessen the freedom of choice for those waiting for decent housing or seeking a housing transfer. Similar considerations apply in many other aspects of the freedom about which we are talking. I fear that the freedom that has been increased for some people today will have to be balanced against the lessening of real freedom for other members of our community.
When I began talking I mentioned what happened when I once canvassed during an election campaign and I quoted the searing comment that was made about politicians by the person who answered the door. One of my personal aims is to try, as best I can, to lessen the gap of credibility between politicians and the community they serve. I shall do my best to achieve that as regards the people to whom I am accountable in my constituency, both the members of my party and my constituents in Battersea, South.

6.9 p.m.

Mr. David Knox: It will be nine years next Monday since I was first elected to the House. Over that period of nine years I have not yet followed a maiden speaker. Today, however, with the exception of my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), I am following five maiden speakers. I should like to congratulate all five—my hon. Friends the Members for Huddersfield, West (Mr. Dickens) and for Bridlington (Mr. Townend) and the hon. Members for Manchester, Blackley (Mr. Eastham), for Bootle (Mr. Roberts) and for Battersea, South (Mr. Dubs).
I remember only too well the trepidation with which I approached my maiden speech. I am sure that it showed on that occasion. Certainly there was no sign of any similar trepidation on the part of any maiden speaker whom we heard today. All spoke with great confidence and all showed great ability. I am sure that I speak on behalf of all hon. Members when I say that I hope we shall hear often from all of them in the future. But perhaps I can make the point that I hope not too often when I am trying to catch the eye of the Chair.
All the maiden speakers paid tribute to their predecessors. It was right that they should do so, because all five had predecessors who were held in high regard on both sides of the House. As their daughter teaches in my constituency, perhaps I can say how sorry I am to hear that both Kenneth Lomas and his wife are ill. I hope that both will soon be restored to full health.
I congratulate my right hon. and learned Friend the Chancellor on his first Budget. In the debate on the Gracious Speech four weeks ago today I said that I hoped he would be a bold Chancellor. Certainly he has introduced his first Budget with a boldness to which we were not accustomed during the many Budgets which his predecessor introduced over the five years that he was Chancellor. I hope that this boldness will continue.
I welcome my right hon. and learned Friend's general strategy. I believe that it is essential to cut direct taxation. The people of this country think that they are paying too much tax, and, because they think that, it has an effect on them in terms of disincentive to hard work, initiative and enterprise. I believe that the Chancellor has today taken the right first steps towards reducing this strong disincentive effect.
I believe also that the effect of the direct tax cuts will be to encourage economic expansion and to get economic growth going once again. As the hon. Member for Battersea, South pointed out, it is only if we can get economic growth that we can achieve the rising living standards and better social and public services that all of us want. I welcome also the pension increases which my right hon. and learned Friend announced today, as well as the improvement in the mobility allow-

ance. These and other measures that have been mentioned should make it clear that the Conservative Party cares quite as much for the disadvantaged in our society as does the Labour Party.
Although I welcome my right hon. and learned Friend's strategy, I welcome some of the specific measures rather less than others. I was sorry that he felt it necessary to make the VAT rate quite as high as 15 per cent., although I strongly welcome the unification of the rate. It always seemed to me to be absurd to have two different rates, causing excessive complications to those running businesses as well as encouraging bureaucracy. The fact that we are now reverting to one rate only will, to my way of thinking, be a great advantage to industry and commerce.
In the current oil situation, I believe that my right hon. and learned Friend might have gone a little further in increasing the tax on petrol. I gathered from what he said that there will be a total addition of 10p per gallon, and this seems somewhat modest in view of the extraordinarily difficult energy situation which faces not just this country but the whole world.
I should now like to say a few words about the effect of the Budget on jobs. I am particularly concerned, as I have been during my period in this House, about the unemployment situation. I am hopeful that today's Budget will lead to a reduction in the level of unemployment, but this will inevitably take time. Under the Labour Government, unemployment more than doubled over the past five years. On a seasonally adjusted basis, it rose from 574,000 in March 1974, when the Labour Party came into office, to 1,247,500 last month, when the electorate eventually rejected the Labour Party. Since September 1975 over 1 million people have been out of work.
I remember, as do all of us who sat in this House between 1970 and 1974, the noise and synthetic anger which the then Labour Opposition showed in the early 1970s, when unemployment briefly and temporarily exceeded the 1 million mark. I noticed that the attitudes and reactions of Labour Members were somewhat different after September 1975. The fact is that unemployment under the Labour Government was higher than at any time since the war, and it has been far too


high for far too long. The Labour Government did precious little to reverse the rising trend of unemployment over which they presided or to create real jobs. It is true that they more than compensated for this lack of real action by a great package of cosmetic measures. That approach may well have satisfied the Labour Party, but it did not satisfy anyone else. It did not satisfy the British electorate, as it showed last month in the general election.
There is great public concern about the level of unemployment in Britain today, and rightly so. There is a great public demand for the creation of real jobs for the people at present without work. There is no doubt in my mind that unemployment is one of the greatest social evils in our society. It creates bitterness against society in general, and bitterness between those out of work and those in work.
The Leader of the Opposition, when Prime Minister was right when he said that that biggest differential of all was between those in work and those out of work. Unemployment also undermines the self-confidence of those affected, with a detrimental effect on the quality of their lives. High unemployment alienates those affected from the society in which they live, particularly from a society, such as that in this country, which is organised on democratic lines.
High unemployment among young people, especially young black people, has had a serious effect on the fabric of our society. It is, therefore, necessary and urgent that something should be done about it. Unemployment is also bad from an economic point of view. It is wasteful of valuable economic resources, and the most valuable economic resource of all is human beings. After all, if the unemployed were at work we would produce more as a nation and there would be a bigger cake for all of us to share in terms of both personal living standards and better social and public services.
For those and other reasons, it is imperative that we get unemployment down considerably. The previous Government failed miserably. I hope that my right hon. and learned Friend's Budget will start the process of reducing unemployment. If we are to succeed in this task

we must raise the level of economic activity in this country. We must create a demand for more goods and services to be produced within this country, which in turn will create a demand for more people to produce those goods and services. In taking action to deal with unemployment in the future, I hope that my right hon. and learned Friend will be even bolder than he has been already. There is always a danger that he might take what can be described as an accountant's attitude to the problem and adopt an accountant's approach. Even though some of the measures that can be taken to reduce unemployment might initially result in an increase in the borrowing requirement, it should be remembered that if one succeeds in creating new jobs and reducing the level of unemployment the borrowing requirement will then be reduced, because less money will have to be spent on benefits for the unemployed.
When considering unemployment we must also remember that there is a time lag of about 12 to 18 months between the taking of measures to deal with unemployment and those measures becoming effective. However much I hope that we have started on the right road today, I believe that it will be some time—at least a year from now—before we see the effect of these measures.
I turn finally and briefly to the question of the European monetary system. Last week we had the Euro elections. I think most people will agree that the turnout was very disappointing. I believe that that showed great public apathy about the EEC rather than necessarily great opposition to it. If we are to engender a greater degree of enthusiasm among the public, we in this House and the Government must show a much more enthusiastic attitude towards the Community. In economic terms, I believe this means that we should aim to join the EMS at the earliest possible moment.
I am sorry that my right hon. and learned Friend did not mention this today, but there are plenty of other opportunities for him to do so. I certainly hope that he will set about the task of preparing the country for joining the EMS at the earliest possible moment. I should like him to set a firm date for our joining, because the greater the degree of economic integration that we have in


Europe, the greater the degree of economic prosperity there will be among the member countries of the Community, and that means, as we are a member country, a greater degree of economic prosperity for Britain. Britain's economic future undoubtedly depends upon the prosperity of the Common Market. We must start contributing much more positively to that to make it work much better, and that means joining the EMS as soon as possible.

6.20 p.m.

Mr. R. B. Cant: I have been a Member of the House for about 13 years. Whenever I have spoken in Budget debates I have generally made a sort of critical appraisal of whatever diet has been put before us in monetary or fiscal terms. On this occasion, however, as I suppose that once again I shall be serving on the Finance Bill Committee, I propose merely to isolate one item of the Budget and to talk in general terms about that.
I want to refer to the cuts that are to take place under the heading of trade and industry, cuts amounting to about £250 million, because within this particular sector of the accounts there is one item to which I hope the Government will turn their attention, perhaps in a slightly reforming spirit.
There is no doubt that the most significant set of statistics to emerge during the past week—not those contained in the Budget—indicated the deterioration in the balance of payments and, in particular, the growth in the volume of imports and the relative decline in the volume of exports. We can see quite easily that the de-industrialisation of Britain is going on apace. It seems absolutely appalling that, in the face of this major economic issue which confronts us, the Government should be cutting down in this area.
I want to make a few comments on one subheading under this item—regional support and regeneration. That is a very grand title. It covers what I think we normally refer to as regional policy.
The Conservative Party manifesto said:
We do not propose sudden, sharp changes in the measures now in force.
Lord Trenchard made a statement in Newcastle the other day saying that he refused to give any commitment that Government grants, even for the special development areas, would not be cut. He

gave an oblique warning to the intermediate areas. He questioned whether it was cost-effective to treat nearly half of the country as a special case.
The cutting process has begun. As Peter Jenkins said in The Guardian,
Just watch out for this particular item, because what you see is just the tip of an iceberg".
This is what worries me if the present Government are allowed to continue for a full five-year term. I wonder whether cuts in this area will have damaging consequences for the country.
I am really making a plea to the Government—I shall not please all my hon. Friends by doing so—for an agonising reappraisal of this thing called regional policy. It has been with us for about 50 years, going back to 1934, when we had the Special Areas (Development and Improvement) Act. At present half of the country, the whole area north of a line from Wrexham to the Wash and west of a line from Wrexham to Plymouth, has some sort of special treatment. The time has come when we should examine this situation more carefully—without, of course, throwing out the baby with the bath water. I live in an area which is totally unassisted, apart from assistance in the matter of land dereliction. My plea is that we should no longer tolerate the anomalies which have arisen.
I am sorry that the hon. Member for Macclesfield (Mr. Winterton) is not present. I take Cheshire as an example. This prosperous county, on any possible indicator of prosperity, growth, wealth and so on, is an intermediate area. That is so for one simple reason: three Tory Members of Parliament, at a particular moment in time, had sufficient political clout to get it designated as an area which should enjoy intermediate status.
But the greatest irony and the greatest anomaly of all is the intermediate area status of Oswestry. Oswestry is a remarkable little place. It has a remarkable Member of Parliament. We all know him to be dedicated to the whole spirit of competition, free enterprise and so forth. He has been appointed to the Treasury and he is responsible for these cuts in public expenditure, aided and abetted by the Financial Secretary to the Treasury. Yet here is a man who, when it suits his own purpose—perhaps I should have mentioned this to him; I thought that he


would be present—tries to get bestowed upon his own constituency that little bit of assistance which makes all the difference.

The Financial Secretary to the Treasury (Mr. Nigel Lawson): As my right hon. Friend is not present, I think it only fair to point out that the question of which areas shall be intermediate areas and which shall not be such areas is entirely a matter for the Secretary of State for Industry and his Department, and it has nothing whatever to do with the Treasury.

Mr. Cant: That is quite true, but I do not see how it affects the argument I am putting forward. Even if another Department is involved—and Ministers occasionally meet one another—a little bit of arm twisting in the right place can do a world of good.
When some areas have totally outgrown the need for assistance, the prospect of ever getting these areas demoted so that they no longer attract these privileges is extremely remote. I have asked one of my right hon. Friends who has been responsible in the Department of Industry for the designation of intermediate areas "What right have you to allow Aberdeen to continue to enjoy special development area status?" He has said "Well, it is impossible to demote any area once it has got the privilege." Ministers always duck out of the question. If I had been a Minister, I would have done the same.
The situation has been further complicated by the fact that the previous Government and, no doubt, the present Government have gone soft on industrial development certificates. It is much easier to get them than it used to be, but there is no real operative policy.

Mr. Donald Anderson: And on offices.

Mr. Cant: And offices. The situation has also been further complicated by the policy of the Department of the Environment on the inner city areas.
I am not saying that the Labour Government's policy was in any sense a failure. The previous Minister of State said that we could be well satisfied with the achievement through the scheme of 325,000 jobs in assisted areas, and that certainly is not a failure. If this Government are to start making cuts in regional

support and regeneration, they must reevaluate the policies and programmes.
The Select Committee on Expenditure said that Parliament needs to be put in a position to assess the effectiveness of the programmes more accurately than has hitherto been possible. The difficulty is that once one decides to revise existing policies, the changes that emerge may be too drastic.
Dr. David Eversley, speaking of regions in change at a meeting of the Royal Town Planning Institute, said that the Government's regional policies were flying in the face of economic logic. He envisaged the emergence of a sun belt, a new commercial and industrial zone covering large areas of the East, South-East and South-West of England, which is thriving and likely to continue to thrive despite all Government attempts to frustrate it. We do not want that.
The blanket approach to regional policy should be modified by greater selectivity and flexibility. Some areas and towns in the country that have chronic problems not only get special development area status but receive more money than is implicit in the policy. The hon. Member for Bootle (Mr. Roberts) spoke of the terrible level of unemployment in his area. In Sunderland the unemployment figure is 13 per cent. It is ridiculous that between a development area and a special development area the difference is only 2 per cent. in the assistance given. We should not adopt such a blanket approach, and more money should go to those areas that need it more desperately.
On the other hand, we must start declassifying some areas. An analysis of the position in Cheshire no longer justifies intermediate area status, and money could be saved here to be spent elsewhere. Like my constituency, Crewe is an old town, yet it enjoys intermediate area status. The level of unemployment there is the same as in Stoke-on-Trent, but because Crewe is in an intermediate area it has today attracted a new industry offering 1,000 new jobs. That will be appreciated in Crewe but not in Stoke-on-Trent, which is just a few miles down the road.
Grants to highly capital-intensive Industries should be reviewed, which would also save money. Substantial grants are


automatically offered to firms on administrative and economic grounds, and, for example, with a petroleum refinery plant, a grant can amount to millions of pounds. For a project costing £10 million, for example, with a petroleum refinery plant and it may employ only 48 men.
There are firms such as GEC, sitting on a cash mountain of about £700 million, which may want to link up with Fairchild to get on the microprocessor bandwagon. It asks for a grant and that is automatically given. But why should the Government pour out the taxpayers' money to provide GEC with £17 million, or £70 million—one gets lost with these petty cash sums—when it has substantial cash reserves? That has no justification or logic.
The main thrust of the Government's regional policy should be directed to development in those areas where the industrial potential is essential to our future, and they must look carefully at de-industrialisation. More money must be spent on areas where our future industries will develop. In the industries, areas and firm that are in decline, money should be used to reduce the impact of unemployment, but unless we start backing the winners we shall not win the battle for our industrial future.
My area of North Staffordshire gives us a key to the problem and contains the foundation for a new regional policy. The criterion for giving aid should not be the imminence of collapse but whether the industry of an area is strong on import substitution and export ratios. Money should be put into those industries that save us importing and that make a considerable contribution to exports—for example, the pottery industry in my constituency. In that industry 60 per cent. of a growing volume of output goes to exports, yet we get nothing to assist in future development, apart from land reclamation and making the area more beautiful—though that is doing a fine job.
The Government will obviously make cuts in regional policy—no one can stop them—but there should be a total reshaping of regional policy financing. The industry sector schemes should continue with a reactivation of selective investment schemes.
My main point relates to industrial development certificates. This is one of

the great mystery areas. People talk about the number of refusals being very low, but no one ever talks about the volume of applications that are never made. Obviously people do not bother to apply to go to an area that does not enjoy intermediate or development area status. I believe that the IDC exemption limit should be raised to 30,000 sq. ft. and that IDCs should not be required for firms that wish to expand in their present premises, for example, throughout the whole of the West Midlands region. Also, I believe that IDC control should be removed for foreign firms, whatever their size and wherever they propose to develop.
We must remove the restraints on development in those areas that will make a key contribution to our industrial future. If this means spending more money on regional support and regeneration, so be it. There is no doubt that our future is bound up with industry. This is the fundamental national economic weakness, and as long as we put constraints on those areas which obviously will make a contribution to this country's future we shall diminish our hopes of national success.

6.41

Mr. Michael Morris: It has been a great pleasure to listen to the five new Members who have contributed to the debate this evening. It is particularly pleasing that four of them have joined the House of Commons from local government. I am not sure about the hon. Member for Battersea, South (Mr. Dubs). Everyone in this House held the hon. Member's predecessor in great respect. He was dearly loved and we wish the hon. Member as happy a time here as his predecessor had. If it is true that the parliamentary constituency of Battersea, South will disappear, we hope that the hon. Member who has recently joined us will still be here after the next election—provided that it is not in a marginal seat.
The most surprising thing about the response of the Leader of the Opposition to the Chancellor's Budget was his complaint that the Chancellor had spent no time on the industrial strategy. When one reflects on the industrial strategy, the time and energy that the previous Government spent on it and the result, one wonders whether that was time


well spent. Of all the policies that the previous Government followed, the industrial strategy was singularly the most ineffective. My right hon. and learned Friend was quite right in not devoting a single word to it.
The Chancellor itemised four principles that had guided him in constructing his Budget. I shall comment on three of them: the need to provide greater incentives for our people, the need to provide them some freedom of choice, and the very important need to reduce the burden of public finance.
There is no doubt that if there is one word that encapsulates this Budget it is "incentive" During the election the then Leader of the Opposition who is now Prime Minister went around the country with one clear message. The then Government thought that she would be put off her stride, but her clear message was that this country needs incentives at every level if it is to succeed in getting out of its problems of the last decade. The Budget today is a very large step along the road of incentives.
The key to the Budget came right at the end, and it related to income tax, first of all to the standard rate. Many of us felt that a 3p reduction was the minimum that could be considered as being a significant step forward. I welcome the fact that the Chancellor has put on the record that his target is to get income tax down to 25p in the pound. We must look to that target within the lifespan of this Parliament.
The Chancellor was also right to draw attention to the fact that across Europe the top rate of tax is about 60 per cent. I am so glad that my right hon. and learned Friend did not follow the traditional British approach of nibbling at the problem and cutting down from 80 per cent. to 73 per cent. to whatever. The Treasury team took the decisive step of going straight down to what it considered was an appropriate rate of 60 per cent. with adjustments. That is the central theme of the Budget, and my right hon. and learned Friend is to be congratulated.
There is also an understanding of where the problems lie. Take, for example, land supply. I am only sorry that the hon. Member for Bootle (Mr. Roberts) has left

the Chamber. There is no doubt—and Labour Members know this as well as I do—that the amount of land coming forward in the last two years has decreased because those who own it believed that the situation was too fluid. We have now had a positive statement about a 60 per cent. rate of tax. That is still a fairly stiff tax and there will not be any great windfall gains to be made out of land. I think that 60 per cent. is a realistic level and it should ensure that those who have the land will now bring it forward so that the private housing sector can move for-word apace to meet the demand.
The other dimension on which I wish to reflect is that of social benefits. I have known the Chancellor ever since he was chairman of the Bow group, and the image that I had of him long before he achieved high office was that of a man of great social conscience who spent a good deal of his early political life trying to find ways to help those in greatest need. He has always tried to ensure that the nation used its money and resources to look after those in need as well as to give incentives to others.
I believe that when Labour Members have had time to reflect they will see that in this Budget the incentives to those who are able bodied and who can respond to the challenge are counterbalanced by help for those who cannot respond. Not before time—and this is to the shame of all hon. Members—war widows' pensions are to be removed from taxation. That was the very least that could be done. I congratulate my right hon. and learned Friend on doing it. Many have talked about doing it, but he has actually done it.
Alongside that, I noted the extra contribution for single-parent families. That has been debated in this Chamber over the last couple of years, but it is my right hon. and learned Friend who has responded. He has responded, too, to the point that was made that the pensioners were short-changed in the last year. Some hon. Members may say that they were short-changed by only a week, but the fact remains that they were short-changed and they feel very strongly about it. It is right that that has been corrected.
In addition, I am pleased that pensions are to be increased by more than originally stated. Indeed the Budget goes


further. We have had news of the increase in mobility allowance but, most important of all, there is the removal from tax altogether of 1˙3 million families. I hope that, if we reach the prosperity we expect, next year we shall see even more families outside the tax net. Therefore, there will be a quid pro quo in respect of those in the lowest earning bracket who will benefit from a Conservative Budget.
I wish to say a few words about exports. I am sorry that the hon. Member for Stoke-on-Trent, Central (Mr. Cant) has left the Chamber. I agree with some of his remarks, and his words are worth considering. Undoubtedly part of the problem of exports is associated with the new-found strength of sterling. It is easy for exporters—and I speak as somebody who was engaged in exporting—to sell when sterling is declining. However, it is much more difficult to sell against an international market when one's currency is stable on increasing in value.
I am not surprised that the figures now illustrate that the volume and value of our manufactured exports and our invisibles have declined in the last quarter. What the country is looking for is not commodity exporting but exporting by British industry on a value-added basis. That means that we must sell goods the quality of which cannot be matched by other countries. Those are the exports that need encouragement.
There is one area in which incentives will also help industry. I believe that we must re-examine the incentives given to exporters. Such incentives have suffered changes over a period of time. My colleagues on the Treasury Bench should listen to our trade colleagues who ask for a switch to export incentives. I welcome my right hon. Friend's relaxation in respect of direct investment overseas.
Many Labour Members are worried about the loss of employment opportunities in the short term. I wish to point out to them—and I have worked in this area of activity—that that is not the result in my experience. Those companies which wish to invest directly overseas are often the most profitable and successful companies in the nation. There is a great deal of activity between the United Kingdom and the EEC and the developing world. I believe that we as a country are right to safeguard our future by in-

vesting directly overseas. Thanks to North Sea oil, we have some room for manoeuvrability. We should make good use of that factor and should not be too inward-looking. We must recognise that we work and trade in a world market. We should go where we get the greatest return—not just in the short term but in the medium and long term.
Furthermore—and this possibly is a more controversial part of my speech—I believe that we should all respond to my right hon. and learned Friend's plea on energy. I believe that as a nation we would be foolish to seek to avoid paying the world price of oil. If in isolation we seek to keep up our home consumption, I believe that that will be to the disadvantage of our balance of payments in the longer term.
I wish to deal with the need to reduce the burden of financing the public sector. My right hon. and learned Friend rightly said that he expected to have an income of £1,000 million arising from the realisation of assets. The only company he mentioned was BP, and I thought that he was right not to mention the others in public. I remind the Government that the New Towns Commission is sitting on several hundred million pounds worth of publicly owned assets. We do not need the New Towns Commission. Its job is completed and its assets must be returned to the people. The sooner that job is carried out, the better. I believe that it should be done in the coming year or so.
There are many other aspects to be considered. I hope that we shall be ruthless in closing down direct-labour departments which consistently make losses. It is time that the continued comments of district auditors and the adverse reports about some direct labour departments were acted upon, instead of these losses being allowed to continue year after year.
I wish, in passing, to mention another small investment—namely, the minority State holding in the British Sugar Corporation. I believe that we do not need that holding.
My right hon. and learned Friend was right to say that cash limits should remain, because those limits are to do with revenue. I hope that I have the message loud and clear. We have at last got through to the Treasury Bench the fact that it is not merely a matter


of cutting Treasury expenditure and forgetting all about revenue. There needs to be a balance between the two. I think I discern such a balance in the proposed cuts.
I wish to make clear to my hon. Friend the Financial Secretary that local government accounts for one-third of expenditure and central Government for two-thirds. On my rough calculations, local government has provided more than its one-third share of the cuts announced so far. I urge the Government to recognise that those proportions should not be violently altered. Local government has a job to do and it should do it. I shall respond as much as anybody else to any call to ensure that that happens. I also hope that we shall not forget the words of the headmaster at a recent conference who said that it is nonsense to spend £400 million on school milk as a subsidy when there is still a need for more books and equipment.
Let me mention a further piece of nonsense. I gather that serious consideration

is being given by a working party set up by the Labour Government to the establishment of a third London airport. That will involve the expenditure of enormous capital sums and will have a great effect on the environment in certain parts of the country—not least on Northampton, South. I believe that the House should reject such a proposal because it can only be a white elephant.

This Budget is unique. It is a great step forward and will be talked of for a very long time in political circles. It takes the steps that we all hoped would be embarked upon. We went into the election with a manifesto containing a clear commitment. The Treasury Bench has had 40 days and 40 long nights to work on it. It is a pioneering Budget, and I believe that the country will respond to it. I very much look forward to the next instalment.

Motion made, and Question put, That the debate be now adjourned.—[Lord James Douglas-Hamilton.]

The House divided: Ayes 146, Noes 58.

Division No. 7]
AYES
[7.0 p.m.


Alexander, Richard
Finsberg, Geoffrey
Mawby, Ray


Alton, David
Fletcher, Alexander (Edinburgh N)
Maxwell-Hyslop, Robin


Ancram, Michael
Forman, Nigel
Mellish, Rt. Hon. Robert


Aspinwall, Jack
Fraser, Peter (South Angus)
Meyer, Sir Anthony


Atkins, Robert (Preston North)
Garel-Jones, Tristan
Miller, Hal (Bromsgrove &amp; Redditch)


Atkinson, David (B'mouth, East)
Glyn, Dr Alan
Mills, Iain (Meriden)


Banks, Robert
Goodhew, Victor
Miscampbell, Norman


Beaumont-Dark, Anthony
Gow, Ian
Moate, Roger


Beith, A. J.
Gower, Sir Raymond
Molyneaux, James


Best, Keith
Graham, Ted
Monro, Hector


Blackburn, John
Gray, Hamish
Moore, John


Body, Richard
Grieve, Percy
Morrison, Hon. Charles (Devizes)


Bonsor, Sir Nicholas
Griffiths, Peter (Portsmouth N)
Morrison, Hon. Peter (City of Chester)


Boscawen, Hon. Robert
Grimond, Rt. Hon. J.
Mudd, David


Boyson, Dr Rhodes
Grist, Ian
Murphy, Christopher


Bright, Graham
Gummer, John Selwyn
Myles, David


Brinton, Timothy
Hamilton, Hon. Archie (Eps'm &amp; Ew'll)
Needham, Richard


Brocklebank-Fowler, Christopher
Hamilton, Michael (Salisbury)
Neubert, Michael


Brown, Michael (Brigg &amp; Sc'thorpe)
Harrison, Rt. Hon. Walter
Newton, Tony


Bruce-Gardyne, John
Hawksley, Warren
Normanton, Tom


Butcher, John
Henderson, Barry
Nott, Rt. Hon. John


Cadbury, Jocelyn
Hogg, Hon. Douglas (Grantham)
Onslow, Cranley


Carlisle, John (Luton West)
Holland, Philip (Canton)
Page, Rt. Hon. R. Graham (Crosby)


Carlisle, Kenneth (Lincoln)
Howell, Ralph (North Norfolk)
Pattie, Geoffrey


Clarke, Kenneth (Rushcliffe)
Hunt, David (Wirral)
Pawsey, James


Cockeram, Eric
Hunt, John (Ravensbourne)
Pollock, Alexander


Cocks, Rt. Hon. Michael (Bristol S)
Jenkin, Rt. Hon. Patrick
Proctor, K. Harvey


Cope, John
Jopling, Rt. Hon. Michael
Pym, Rt. Hon. Francis


Cormack, Patrick
Kellett-Bowman, Mrs. Elaine
Raison, Timothy


Costain, A. P.
Kitson, Sir Timothy
Rathbone, Tim


Cranborne, Viscount
Lang, Ian
Rhodes James, Robert


Dean, Paul (North Somerset)
Lawrence, Ivan
Roberts, Allan (Bootle)


Dickens, Geoffrey
Lawson, Nigel
Rodgers, Rt. Hon. William


Dover, Denshore
Lloyd, Ian (Havant &amp; Waterloo)
Ross, Stephen (Isle of Wight)


Dunlop, John
Lloyd, Peter (Fareham)
Shaw, Michael (Scarborough)


Dunn, Robert (Dartford)
MacGregor, John
Shelton, William (Streatham)


Durant, Tony
McQuarrie, Albert
Shepherd, Colin (Hereford)


Edwards, Rt. Hon. N. (Pembroke)
Major, John
Shepherd, Richard (Aldridge-Br'hills)


Eyre, Reginald
Marland, Paul
Skeet, T. H. H.


Fairgrieve, Russell
Marlow, Antony
Smith, Dudley (War, and Leam'ton)


Faith, Mrs. Sheila
Marten, Neil (Banbury)
Speller, Tony


Fenner, Mrs. Peggy
Mather, Carol
Steel, Rt. Hon. David




Stevens, Martin
Walker-Smith, Rt. Hon. Sir Derek
Whitney, Raymond


Stewart, Rt. Hon. Donald (W. Isles)
Wall, Patrick
Wilkinson, John


Stradling Thomas, J.
Waller, Gary
Williams, Delwyn (Montgomery)


Taylor, Robert (Croydon N. W.)
Ward, John
Winterton, Nicholas


Thorne, Neil (Ilford South)
Warren, Kenneth



Trippler, David
Watson, J.
TELLERS FOR THE AYES:


Waddington, David
Wells, P. Bowen (Hert'rd &amp; Stev'nage)
Lord James Douglas-Hamilton and


Wainwright, Richard (Colne Valley)
White, Frank R. (Bury &amp; Radclifle)
Mr. Anthony Berry.




NOES


Bidwell, Sydney
Hogg, Norman (E Dunbartonshire)
Race, Reg


Brown, Ronald W. (Hackney S.)
Holland, Stuart (L'beth, Vauxhall)
Rooker, J. W.


Campbell-Savours, Dale
Home Robertson, John
Ross, Ernest (Dundee West)


Canavan, Dennis
Homewood, William
Sever, John


Carter-Jones, Lewis
Janner, Hon. Greville
Short, Mrs. Renée


Cartwright, John
Lambie, David
Skinner, Dennis


Craigen, J. M. (Glasgow, Maryhill)
Lofthouse, Geoffrey
Soley, Clive


Cryer, Bob
McGuire, Michael (Ince)
Spriggs, Leslie


Cunliffe, Lawrence
McKay, Allen (Penistone)
Stallard, A. W.


Dalyell, Tam
McNally, Thomas
Stoddart, David


Davis, Terry (Br'm'ham, Stechford)
McNamara, Kevin
Straw, Jack


Dean, Joseph (Leeds West)
Marshall, Jim (Leicester South)
Taylor, Mrs. Ann (Bolton West)


Dixon, Donald
Martin, Michael (Gl'gow, Springb'm)
Thomas, Dafydd (Merioneth)


Dobson, Frank
Maxton, John
Welsh, Michael


English, Michael
Maynard, Miss Joan
Whitehead, Phillip


Fletcher, Ted (Darlington)
Mikardo, Ian
Woodall, Alec


Foster, Derek
Mitchell, Austin (Grimsby)



Foulkes, George
Newens, Stanley
TELLERS FOR THE NOES:


George, Bruce
O'Halloran, Michael
Mr. Stan Thorne and


Grant, George (Morpeth)
O'Neill, Martin
Miss. Jo Richardson.


Haynes, David
Powell, Raymond (Ogmore)

Question accordingly agreed to.

Debate to be resumed tomorrow.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)

Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

7.12 p.m.

Mr. William Shelton: It is with great pleasure that I recommend the Bill to the House, in the hope that it will be given a Second Reading. I shall keep my remarks brief, since the measure is not especially contentious. No petitions have been received against it and it will therefore go to the Committee for unopposed Bills, should it succeed tonight. The Greater London Council (Money) Bill was given an unopposed Second Reading earlier today.
Hon. Members from all parts of the House always welcome a debate on London. It is our capital city, and it suffers from many of the inner city problems that we see in our other great cities. It also has special problems of its own. Figures that I received recently showed that last month unemployment in Greater London was under 4 per cent., a most satisfactory level, but unemployment in the docklands and the adjacent areas was

13 per cent., which gives some measure of the special problems to which I have referred.
In 1966 the population of London was about 7·8 million. Eleven years later it was 6·9 million. That is an indication of the decline of the city, a decline for which all London Members, whatever their political persuasion, feel great concern.
It is always a great pleasure to debate London, and I and many of my hon. Friends looked rather wistfully during the last Session of Parliament at the time that was allocated to debates on Scotland and Wales.
I warmly welcome my hon. Friend the Member for Hampstead (Mr. Finsberg) to the Government Front Bench. He has made a great contribution over the past two years to solving some of London's problems, and I hope that he will intervene in the debate.
I shall deal briefly with the clauses in the Bill. The first of any substance is clause 3, which deals with the licensing of public entertainment in Greater London and seeks to amend schedule 12 to the Local Government (Financial Provisions) Act 1963. The GLC licenses public entertainments in London—that is, music and dancing—specifying such matters as the number of ushers who shall be present. Many of the specific requirements of the licence are often contravened by licence holders, but they can be


prosecuted for only one offence—breach of the licence. The penalty for that is currently a maximum fine of £200. That may have been satisfactory in the past when a licence holder was anxious to retain his licence year after year. That has changed in certain respects, especially with the introduction of pop concerts, for which the holder may wish to hold only one licence, never to return for another. It is becoming increasingly profitable for such a licence holder to ignore all the requirements of the licence and not to worry about such matters as the numbers attending, the number of stewards, sanitary conveniences, and so on. He does so because he knows that he can be prosecuted for only one offence, and that is breach of the licence.
The objective of the clause is to create separate offences for each and every breach, and to increase the fine to a maximum of £500. In an extreme case, therefore, if there were 10 distinct breaches of the licensing provisions a licence holder could be fined as much as £5,000. This sensible provision has been brought forward as a result of the Council's more difficult experiences with pop concerts at which almost every code of the licence has been breached.
I turn now to clause 4. The Council has a statutory duty to maintain various committees to operate alongside certain statutory bodies. There is, for example, the London Transport Executive. In 1970 the London Transport passengers' committee was set up. This consists of a chairman and members who in return for their duties receive travelling, subsistence and pay allowances. They do not receive salaries. The previous Government recommended that the chairmen of all major consultative bodies for the nationalised industries should be paid. For instance, the chairman of the transport users' consultative committee receives a salary of £1,000 a year. It is proposed in clause 4 that the Transport (London) Act 1969 should be amended and that the chairman should be paid a salary instead of attendance and financial loss allowances.
I felt that this provision needed to be looked at fairly closely, and I discovered that the duties of the committee and its chairman are considerable. It is no sinecure. In 1978, 237 matters were

brought before the committee, mainly consisting of complaints by the public. Each year the committee meets six times, and the chairman is on a sub-committee which also meets six times. In 1978 he attended 23 working parties. What we are doing is bringing the chairman of this useful committee into line with the chairmen of most of the other consultative committees to the nationalised industries.
Clause 5, which is not of major national importance, refers to advertisements, such as those on the drums in Oxford Street which were put up not only to advertise but to enhance amenities. It refers also to the maps—with advertisements round the edge—which identify where the onlooker happens to be. They are often put up by councils which receive some small income from them. Apparently it is not certain whether it is legal for the Greater London Council and other councils to do this. It seems that they are not empowered to do it. The issue has never been challenged or tested, but it was felt that it might be sensible to regularise a position which might be irregular. This clause seeks to legalise the existing situation so that those advertising drums in Oxford Street will not be removed.
Clause 6 is a tidying-up clause of no significance. Nor is clause 7 of great significance. Apparently the provisions of the Road Traffic Act 1974 regulating parking on grass verges and footpaths will come into force in October of this year. As the GLC currently possesses similar powers in relation to such parking, it was felt that it coud be embarrassing to have two similar, though not exactly similar, provisions, one under the Road Traffic Act 1974 and the other under GLC powers. Clause 7 therefore seeks to repeal the powers of the GLC to regulate parking in certain places as and when the provisions of the Road Traffic Act 1974 come into force. When those provisions come into force, and if this clause is accepted, the GLC will simultaneously lose its similar powers, which will be taken over by the Government. I think we all agree that these are sensible provisions.
Clause 8 touches on what might be thought to be a contentious matter, which is the transfer of Greater London Council housing estates to the boroughs. However, the clause itself is in no way contentious. It proposes to establish the


machinery to ease the transfer when it takes place and seeks powers to set up a staff commission which will ease the transfer of staff consequent upon the transfer of the GLC estates. As staff are transferred to the local boroughs, there will inevitably be a rundown of GLC staff and a build-up of staff in the boroughs. This commission will assist in the transfer of staff from the GLC to the boroughs. Perhaps my hon. Friend the Member for Hampstead will enlighten us as to the date of the transfer.
The purpose of the commission is to safeguard staff interests. Clause 8 goes into some detail as to its general purposes. They are:

"(a) considering and keeping under review the arrangements for the recruitment of staff by the Council or a transferee authority …
(b) considering such staffing problems arising in consequence of a staff transfer order …
(c) advising the Secretary of State on the steps necessary to safeguard the interests of staff"
and so on.
The commission is not controversial. It has general support from the white collar unions. I understand that the previous Secretary of State, for the Environment, the right hon. Member for Stepney and Poplar (Mr. Shore), also supported the commission, which is a matter of machinery and not of principle. Consultations are still proceeding with staff representatives and the authorities concerned. I am sure it would be right, proper and sensible to give the Greater London Council the powers that it seeks in this case.
With clause 9 we move on to what is, perhaps, a more debatable issue. It certainly caused considerable debate last year, as many hon. Members will remember. The clause refers back in some ways to the inner city problems which London faces. The purpose of the clause is to give the Greater London Council and London boroughs powers to guarantee loans made to companies by banks and other institutions for the purpose of constructing, extending or improving industrial or commercial building. The nonsense is that at the moment the GLC and the boroughs have power to make such loans but not to guarantee loans. In other words, they can go the whole hog and

put their money into a venture but they do not have the power to go to a bank and guarantee part of a loan which the bank is proposing to make to this or that company.
There was some controversy last year about this proposal. It was accepted after considerable discussion by the Select Committee and then removed on Report. The proposal meant a far wider use of various powers in this context. The clause that we are now examining is much less ambitious and concerns only the power to make guarantees. It is hedged about, as right hon. and hon. Members have seen, by certain safeguards. For instance, it is proposed that this power should expire at the end of 1984 unless it is then renewed. In London it is restricted to areas designated as such by the Inner Urban Areas Act 1978, so that this power can be used only in those areas of which the House is aware. The local authority concerned will, of course, assure itself that a loan will help the development of the economy in the area in which that loan was being made and that the financial prospects are sound. There will have to be evidence that the private market has provided some venture capital and is taking an un-guaranteed first risk.

Mr. Guy Barnett: I am interested in the safeguards described by the hon. Gentleman. Is there any limit on the amount which a local authority, or the Greater London Council, may guarantee in a particular case? Will any sanction be required from the Government before a guarantee is made?

Mr. Shelton: My understanding is that if the Greater London Council is given this power no sanction will be required. However, I shall check on that and also on the limit. My understanding is that there is no limit, but I shall assure myself that this is so before the end of the evening and if I am wrong I shall tell the House.
This provision is also in line with the recommendations of the interim report of the Wilson committee on the financing of small firms. I confess to some difficulty about this, because if it is a sound venture that gives a return, why should the company look to the local authority for a guarantee? The only answer that I can give is that the problems that we face in


London are of such gravity, in some cases, that I believe that this would be a tool in the hand of local authorities which, in certain cases, could be advantageous for the area.
I have already spoken of the 13 per cent. unemployment figure in the dockland and associated areas, which is extraordinarily high compared with the 3 per cent. figure in the Greater London area as a whole. We must, I suggest, look to every measure that we can adopt to improve the situation, and I believe that this is one of them. In any event, I repeat that it seems to me extraordinary that councils have the power to lend all the money themselves but do not have power to guarantee a loan. This is a normal piece of financial management. Of course, it is much cheaper for a council to make a guarantee, provided that the guarantee is not called upon, than it is to put up all the money itself as first provider.

Mr. John Hunt: Will not this power be of particular value to small firms in Greater London and inner London which are not covered by the existing Industry Acts? In that sense, are we not extending the help which is already given under existing legislation but specifically gearing it to inner London and its problems and the contribution which small firms can make towards their solution?

Mr. Shelton: My hon. Friend is absolutely right. This is a point made also by the Wilson committee on the financing of small firms. We on these Benches—I believe that the Opposition join us in this—look to small firms to contribute substantially to the reduction of unemployment in London. I do not wish to be drawn into the activities of the Location of Offices Bureau over the past 10 years, but at least it seems to have reversed its movement and is now trying to bring back firms into Greater London. At any rate, this question of guaranteeing loans can be thrashed out in Committee, and I very much hope that it will not hinder the Second Reading. We can look at it in detail in Committee and make our decisions then.
Part IV, which covers a considerable number of closely written pages in the Bill, deals with the registration of hostels by borough councils. This is an issue

which certainly calls for action. Over the past few years a considerable number of problems have arisen where hostels have abused their position and those who use them, allowing too many youngsters to use them, putting up tents in the back garden, not providing sufficient amenities, and so forth—in other words, overcrowding in the summer period. I believe that there must be a move towards their regulation.
However, I must tell the House that all the clauses in part IV are under consideration and discussion. There is some reservation about them—about the wording, not about the objective—and I think it likely that they will be withdrawn before the Committee stage. I believe that they will then be represented next year, so the Bill will lose a good bit of bulk when it goes to Committee. Since the whole of part IV will almost certainly be withdrawn, I shall not now weary the House with the intricacies of the regulation of hostels.
The final two clauses calling for comment, clauses 22 and 23, are both London borough clauses included in the Bill at the request of the London boroughs. Clause 22 is not exactly of transcendental importance, although one presumes that those suffering infestation by the brown-tailed moth feel badly about it, since I understand that the windblown hairs of this moth, if they happen to lodge in a person's underclothing when it is on the clothes line, will cause that person considerable inconvenience when the underclothing is next worn. I understand that the moth also kills trees and shrubs.
I notice that the invasion by this moth started from Canvey Island. I see that my hon. Friend the Member for Essex, South-East (Sir B. Braine), who is responsible for that area—no doubt, he is exhausted by his exertions yesterday—is not here to defend Canvey Island or to explain how he came to release on the world this pest from Canvey Island, which has now reached Tower Hamlets and is advancing westwards.

Mr. Ian Mikardo: And southwards, so the hon. Gentleman had better watch out.

Mr. Shelton: The GLC is seeking powers in the hands of the boroughs to serve notice on occupiers of land infested by the moth, requiring that they should


spray their land or, if they do not do so, power for the authority to do it itself and to make a charge. Exactly how the councils propose to identify which bit of land has the moth on it, apart from which trees and shrubs have been stripped by it or which people have been made uneasy in their underwear, I really do not know, but I am sure that this is something that will be welcomed with acclaim by all those who find themselves in the path of its attack.
Clause 23 promises relaxation and fun for our capital city. Reading it carefully, one reaches the conclusion that its purpose is to allow councils to give permission to restaurants, cafes and so on to place tables and chairs on the pavements. At present they are theoretically prohibited from so doing by the various Road Traffic Acts, or whatever it may be, but if they have this power, perhaps, when the sun shines, we may see London looking a bit more like Paris, at least in the way that tables and chairs are put out. I am sure that we should all welcome that and that it must be regarded as a good thing.
I have now come to the end of my brief description of the various clauses of the Bill, and I hope that the House will give it a Second Reading.

7.38 p.m.

Mr. Ronald W. Brown: The House will wish to thank the hon. Member for Streatham (Mr. Shelton) for the courteous and friendly way in which he has sponsored the Bill and gone through the clauses. He has had an advantage over the rest of us in having very few clauses to go through, since this is one of the thinnest Greater London Council (General Powers) Bills that we have had for some time.
I warmly support what the hon. Gentleman said about clause 7. This seems to me to be extremely important, and I feel that the GLC could have done far more in transport matters anyway with particular reference to highways and footways. In my constituency roads are blocked. Graham Road, in particular, is regularly blocked, yet the GLC seeems unwilling to do anything about it. We are constantly drawing attention to the vast array of heavy vehicles travelling up and down that road. Only in the past three months, three of my constituents were injuired.

Although it is aware of the problem, the GLC does absolutely nothing about it.
Last week I put a question to the Minister of Transport asking if he would call a meeting between the GLC and the Hackney borough council, since there seems to be no way in which they can call themselves together. The answer the Minister gave me was that he could not do that; it was the responsibility of the GLC, which ought to do it. I hope that the hon. Member for Streatham will tell his friends at County Hall that it is about time they acted. Graham Road is an important area. When the GLC decided that lorries would be banned from going over Tower bridge, they were re-routed. They now use Graham Road automatically.
We are merely told the effect of clause 7, but even that is a tragedy. As the hon. Gentleman knows, 1 October 1980 is the operative date. We shall have to wait until then before help can be given in our boroughs.
The hon. Gentleman indicated that he considered clause 8 to be non-contentious. I must advise him that that is not so. It is extremely contentious. I do not believe that the unions are entirely in favour of its provisions. NALGO has indicated clearly that implementation on 1 January 1980 will be far too quick. It considers that implementation should be delayed until 1 April 1980 so that everything may be brought together.
Also challenged is the need for a new commission. It argues that the New Towns Commission, which is sitting and has been sitting for a long time, is running out of work and that it could pick up another brief. It is argued that it is not necessary to establish a fresh bureaucracy to undertake the work. I hope that the GLC will consider whether it is necessary to establish such a commission.
As we are talking about the setting up of a commission and all the other nonsense that is taking place, housing estates in Hackney and in other London boroughs are being deliberately run down. There is no maintenance and tenants are unable to be transferred. Property is being kept empty for months on end. All that is costing the ratepayers a great deal of money. To argue about a commission is not dealing with the point that we wish to make to the GLC, namely, that


the whole exercise is ridiculous. No provision is being made for those in my constituency to enable transfers to be made to other property outside Hackney. Therefore, there is strong objection. How can the GLC claim that it is handing back 200,000 homes without any transfer agreement and without any agreement on the financial issues as it affects all London boroughs? Surely that is nonsense.
We know that the GLC talks to its friends in the outer London boroughs. Of course, those boroughs have a particular interest. They do not want to allow transfers from inner London to outer London. They are happy to have transfers from outer London to inner London if they have a problem of which they wish to divest themselves. They do not accept the reverse argument.
On clause 8, I take a different view from that expressed by the hon. Gentleman. I do not believe that the GLC has made any real endeavour to undertake its own responsibilities seriously. It is trying to offload the problem. There are involved 32 boroughs, 22 district councils and over 7,000 staff. However, the GLC regards it as a simple exercise to set up a commission on 1 October 1979. It seems to think that everything will come right on the day. It is fascinating that the one word that never appears is "tenant", the person for whom the GLC is supposed to be working. Tenants are living in the property that it owns. They are the people whose lives can be affected by these decisions.
I find clause 9 fascinating. When I read it I thought that there was something rather familiar about the wording. It is part gobbledegook and I remembered it. I found that clause 9 was clause 14 in the 1977 GLC Bill. Clause 14 also seemed familiar and I read the debate on Second Reading. I found that the hon. Member for Streatham and some of his hon. Friends tabled a motion seeking the exclusion of clauses 8, 9, 10, 11 and 14. The hon. Gentleman wanted to prove that he was against clause 14. He was not satisfied merely with tabling a motion. In the Division, the hon. Gentleman served as a Teller.
Against that fascinating background, I waited tonight to hear the conversion on the road to Damascus. I waited to hear the hon. Gentleman explain his enlighten-

ment and why he is now in favour of the scheme. I read the Official Report of the 1977 debate. I noted how the hon. Gentleman approached his task on that occasion. He said:
I put my name to the motion for an Instruction and I wish strongly to associate myself with the persuasive and crisp speech of my hon. Friend the Member for Hampstead (Mr. Finsberg)".—[Official Report, 26 April 1977; Vol. 930, c. 1145.]
It is fascinating to read the words of the hon. Member for Hampstead (Mr. Finsbery), now Under-Secretary of State for the Environment. The hon. Gentleman referred to a mess and mass of politically motivated clauses. He talked about "Bennery". He would have none of it. He told me that on 5 May 1977 it would not be part of the Bill. If that was his attitude at that time, why have it tonight?
I thought that there must be something different in the Bill now before us. I read it carefully and found that there were only two differences. First, the 1977 Bill defined the words "industrial building". Those words were defined closely, but this Bill does not offer a definition. I hope that the Under-Secretary of State will tell my why it does not. "Commercial building" were words described closely in the 1977 Bill. That was done so that we would know what the term meant. There is no such definition in the Bill. I wonder why. We want to know what "industrial buildings" and "commercial buildings" are in terms of the guarantees that are being given. I hope that definitions will be spelt out.
On a further re-reading, I thought that the only possible argument was that application would be until 1984. That is a change, but it is not a change in principle. If one were to oppose it, seek its withdrawal and become a terrier against it, surely there would have to be a more persuasive argument than the fact that it will fall five years from now.
I hope that the House will be told why the clause that Labour Members argued passionately for and were prepared to vote for in a Division, which was then opposed by Conservative Members, is now being sponsored by the Conservative Government. During the passage of the 1977 Bill, Labour supporters did not have the advantage of the assistance of Government Whips, but I suspect that the


Government Whips will be present to-night. In 1977 we did our private whipping. On that occasion 192 Members voted in favour of the clause.
If part IV is removed from the Bill, there is little left after clauses 8 and 9. I intend to discuss in detail the value of hostels. Moreover, the hon. Member for Streatham has taken that issue away from me, so my hare has gone. I regret that.
The GLC must be invited next year to put before Parliament a general powers Bill that will do genuine work for London. That which is of any good in the Bill now before us belongs to the boroughs. If we take away the brown-tailed moth, which belongs to the boroughs, we do not have much left. I hope that the GLC will take its task seriously.
I do not want to launch into a political attack on the GLC tonight. It is relatively easy meat. However, some of us are getting rather fed up with it. Its behaviour in London is appalling. It is doing everything by means of secret sessions. The idea of committee meetings has long since passed. Things are done by chairman's edict. Members know nothing until after the event. That is bad for democracy.
I was not in favour of the GLC in the first place. I though it was an excess that we could do without. However, once it was established, I was happy that it should play a strategic role. But now it does not wish to be strategic. It does not want the housing responsibility and the work that it should be doing, including planning responsibilities. It seems to be divesting itself of its basic responsibilities. The Bill is an indication that the GLC has run out of steam, if it had any in the first place. Under this Administration it is wilfully abdicating its responsibility. The sooner 1981 comes and those at present in power are gone, the better it will be for London.

7.51 p.m.

Mr. John Hunt: This Bill, by the standards of general powers Bills, is a fairly thin and modest measure. Its proposals are modest and constructive and are, on the whole, non-controversial—even the part which deals with the activities of Euproctis Chrysorrhoea. I thought that he was a member of the Greek underworld. However, it is the brown-tailed moth, which has created a

trail of havoc and destruction from Canvey Island to Tower Hamlets.
I shall deal briefly with those parts of the Bill that I deem to be the most important. In the process, I shall take up one or two of the comments made by the hon. Member for Hackney, South and Shoreditch (Mr. Brown).
I am glad to see that under clause 4 the chairman of the London Transport passengers' committee is to be paid a proper salary. That is the right way to go about the matter. The committee is one of the few statutory bodies of its kind for which no provision was made. To pay its chairman a salary will help to give the committee the status it deserves. We should like to congratulate Mr. Ian McLeod on his recent appointment as chairman of the committee. We wish him well in his watchdog work on behalf of the often harassed and frustrated users of London Transport.
Clause 8 deals with the commission for the transfer of the GLC housing staff. That is a consequence of the transfer of the housing management functions to the London boroughs. The transfer is a separate issue. However, the hon. Gentleman referred to it.
On the latest figures that I have, 23 London boroughs went along with the GLC proposals. Five of those boroughs are Labour-controlled. The hon. Gentleman referred to the shortage of time and the inadequacy of consultation. The target date for transfer has already been extended once. That is an earnest of the GLC's intentions in this matter. There is no wish to rush the transfer. However, Government supporters believe that it is a desirable move.
The hon. Gentleman said that there had been no reference to the interest of the tenants. The transfer of the GLC estates to local boroughs will be of benefit to the tenants. It will bring about an element of decentralisation and bring the tenants closer to the officials and councillors with whom they have to deal in the boroughs in which they live. Therefore, there is a lot to be said for the transfer. I do not think that this is necessarily a party political issue.

Mr. Ronald W. Brown: How many GLC estates are there in Bromley?

Mr. Hunt: There are 750 GLC properties within the London borough of


Bromley. I am sure that a number of those tenants will prefer to make their complaints and contacts at the Bromley town hall rather than at the remote and distant County Hall. This step will be welcomed by most tenants.
I turn now to clause 9 and loan guarantees. The hon. Gentleman had fun at our expense. He alleged all kinds of inconsistencies by some of my hon. Friends. Similar powers were sought in last year's general powers Bill. Those efforts were obstructed on that occasion not by Conservative Members of Parliament but by the Department of Industry, which was greatly opposed to them, largely on the basis that it did not want powers granted to London which would then perhaps be requested by other parts of the country. I did not know what was the motivation. However, this was in line with the general discrimination against London which we have found too often from Government Departments in past years. The Department of Industry was opposed. I think that the Department of the Environment was not too happy, either.
Although the provisions referred to were supported in Committee, they were rejected on Report, presumably as a result of the votes of Members of the Labour Party, and certainly by the payroll vote. I do not think that the hon. Gentleman is in any position to cast aspersions upon Government supporters. I am persuaded by those in office across the river that these powers are necessary and will be of great benefit to the revival and regeneration of inner London.
The proposal for loan guarantees in designated districts will be of special assistance to small firms which, most of all, may assist in the revival of London which Members of Parliament on both sides want to bring about. Many of these small firms do not at present qualify for help under the Industry Act. This is an attempt to supplement existing legislation and to reduce the high level of unemployment in inner London which, in parts of dockland and elsewhere, is running as high as 13 per cent.
On this occasion the GLC again requests these powers, albeit in a more restricted form than hitherto. My hon. Friend the Member for Streatham (Mr. Shelton) detailed a number of safeguards that are being written into the Bill on

this occasion. For example, it is to apply in London only in districts designated for the purposes of the Inner Urban Areas Act 1978. It will expire on 31 December 1984. The power is not to be exercised unless the designated district authority is satisfied that the industrial and commercial buildings concerned will be of benefit to the district and that the building is unlikely to be provided, extended or improved unless the guarantee is given.
These are very strong and very adequate safeguards. On that basis, I can see no possible objection to these powers being granted. They will be of direct help in bringing new jobs and better prospects to the most rundown and depressed areas of inner London.
For all these reasons, I believe that the Bill, modest as it is in its scope and intentions, is worthy of support on Second Reading. I hope that it will be given an unopposed Second Reading. Points of detailed discussion can be further considered at a later stage, but I think that in principle we ought to approve the Bill tonight, and I hope that we shall do so.

8 p.m.

Mr. Douglas Jay: I am sure that the Bill contains many worthy minor proposals. I am fully prepared to accept the views of the hon. Member for Streatham (Mr. Shelton) about the brown-tailed moth because, as far as I know, it has not reached either Battersea or Hampstead.

Mr. Mikardo: Mr. Mikardo: There is one on the way.

Mr. Jay: I am also fully in favour of the guarantees for industrial loans. Unlike the hon. Member for Streatham and the Under-Secretary of State for the Environment, I was fully in favour of those in 1977 and 1978 as well as in 1979. But when we come to clause 8 and the proposals connected with the transfer of GLC housing to the boroughs, it is a very different story. As has been said already, there has been very little mention of the tenants of council houses so far, or indeed of the feelings of the people of London about these proposals. There is no doubt that housing policy has far more effect on the lives of ordinary people and ordinary families in London than any other proposal in the Bill.


I believe that the transfer of GLC housing to the boroughs will have a very harmful effect on housing. Over the last 20 or 25 years, I have found that of the distressed families coming to me for help with their housing, there is always a number of council tenants. They are often widows whose families have grown up and moved elsewhere and whose sole desire is to move to another part of London outside their own borough because they wish above all to live near to their son or married daughter.
I have proposals from families to move, for instance, from Battersea to Islington, or to somewhere in North London. Up till now, almost the only practical way of doing that, if they are too poor to buy a house and are only on the council list of their own borough, is through the old London County Council and GLC arrangements which enabled people to move from one part of London to another. If nearly all this GLC property is to be transferred, that possibility will be severely curtailed. I am seeing cases where it is already happening.
It is rather ironic that we had the Chancellor of the Exchequer saying four times today that one of the objects of his proposals was to increase freedom of choice for ordinary people. Nothing will restrict freedom of choice in housing more than restricting movement to the narrow boundaries of the boroughs. That has no particular relation with ordinary human life.

Mr. John Hunt: rose—

Mr. Jay: I think that the hon. Gentleman is intending to say that there is to be an arrangement for exchanges and for a central bureau between the boroughs. I am sure that the intention is good, but I have found in the past that it hardly ever works for families who are really in need. Although I am sure that it is well-intentioned, I shall believe it when I see it, and I am sure that the transfer will curtail movement between boroughs to a very much lower level than that which existed when the GLC was really a housing authority.
We have to remember that at the same time the GLC is selling council houses and flats wholesale. In order to do this, it is at the present time holding empty a large number of properties. I do not

know how many properties are involved—perhaps the Minister can tell us later—but it is certainly holding properties empty while they await sale. The double effect of these two actions is to reduce the total stock of council property available for people who wish for transfers and who cannot afford anything other than rented council property. Indeed, the GLC at the present time seems not merely to be ceasing to be a housing authority but becoming a positively anti-housing authority in that all its actions are making the housing position in London worse.
There might be some mitigation of this situation if the transfer to the boroughs were to create a better position in the boroughs, but unhappily, in the case of my borough council, which is now under Conservative control, it is merely aggravating the position further, because that council is following precisely the same policies. In the first place, it is also engaged in an almost reckless sale of council properties, not merely to existing tenants—for which there is no doubt in some cases a good argument—but of newly-built properties on the open market.
The major effect of this is, of course, that the vacant premises available for the transfer of overcrowded and distressed families are now steadily shrinking in number month by month. I am finding in my surgery and my correspondence—which is as to nine-tenths concerned with housing—that the whole process of transfer, which, goodness knows, has always been slow enough, is now being further slowed down. I am being compelled to say to people who come to see me in these circumstances that if these Conservative policies continue both at County Hall and in the boroughs I can see very little hope after some time of any transfers at all being possible.
In the case of the Wandsworth borough council, not merely is all that true but it has aggravated the position further by an extraordinary decision that transfers from council flat to council flat may only take place within small areas within the borough—areas of not more than a few hundred yards or so in extent. If one adds that to the difficulty of moving from one part of London to another, one can only say that it is a remarkable way of giving free choice to people as to where they live.
The total effect of all these policies will, I believe, very soon be to make the housing position in London—which has always been the most acute problem for ordinary people, certainly in my area—worse than it has been at any time since the war. One of the factors contributing to this is the GLC abdicating or dismantling its whole housing policy. The present GLC seems not to care at all how people live in London. That is the only explanation of its policies. I believe that its policy will have a deplorable effect.
Although, as I said earlier, some of the proposals in the Bill are worthy or justifiable, I do not think that we ought to let it pass without some sort of protest about the effect on the lives of people in London of the housing policies of the Conservative GLC and some at least of the Conservative boroughs.

8.9 p.m.

Mr. John Wilkinson: I should like first to support the remarks of my hon. Friends the Members for Streatham (Mr. Shelton) and for Ravensbourne (Mr. Hunt) and then to refer the House to item 10 of the schedule, which covers flood prevention. In particular, I refer to the urgent need for flood control works to be initiated in the Ruislip Gardens area of my constituency to avoid a repetition of the serious flooding which occurred in August 1977, causing about £750,000 worth of damage. Since then, there has nearly been further flooding on at least two occasions. It has been estimated that about 250 homes in Ruislip Gardens are currently at risk of flooding in extreme weather.
To its credit, the Greater London Council has acknowledged the extent of the problem, and only a week or two ago the new chairman of the GLC's public safety committee met the two Bourne ward councillors from South Ruislip, Councillors Maher and Howarth, and the flood committee chairman, Mr. Barrand The GLC member for Ruislip-Northwood, Mr. Cyril Taylor, has been unremitting in his efforts to secure an early start to the flood control measures necessary in South Ruislip. Hitherto, the GLC had indicated that work on this preject would begin as soon as the design work had been completed.
Last year the GLC approved a 30-year flood alleviation programme for non-tidal rivers costing £81 million, entitled RCS 110. The document, in the first paragraph, admits:
As recently as 1977, severe and damaging floods inundated some 1,200 homes in north-west and south-east London and since then more properties have been flooded during 1978 in south London and in January 1979 in west London. As well as the direct damage caused to property, both public and private, there is extensive indirect damage due to dislocated telecommunications, road and rail transport systems and public utility services (for example, some 40,000 telephones were out of action for up to six weeks in 1977)".

Mr. Ronald W. Brown: I am trying to follow the hon. Gentleman. To which clause of the Bill is he referring? There is no item 10. I have been searching for it. He has defeated me in following him.

Mr. Wilkinson: I anticipated that question. The parliamentary solicitor to the Greater London Council specifically advised Members in the GLC area that they were entitled to raise the subject of flood control, and he brought to the attention of hon. Members—

Mr. Brown: I believe that the hon. Gentleman is on the wrong Bill. I think that he is on the Money Bill, which was unopposed. We are on the general powers Bill now.

Mr. Wilkinson: In that event, I got my opportunity wrong. It is important that the flood—

Mr. Mikardo: On a point of order, Mr. Deputy Speaker. I do not want to be unkind to the hon. Gentleman, who is obviously struggling, but, if I understood him aright, he said that the solicitor to the Greater London Council sent out information about what was and was not in order on the Bill. Surely only the Chair can decide what is in order in our discussions. If what the hon. Gentleman said is right and I have not misunderstood, surely the solicitor to the GLC was acting grossly ultra vires in suggesting what we may discuss. Is that right?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I am grateful for support from the hon. Member for Bethnal Green and Bow (Mr. Mikardo). In fact, I had not heard what the hon. Member for Ruislip-Northwood (Mr. Wilkinson) said,


because I was dealing with another matter. If he said what is alleged, I think that he must be wrong.

Mr. Wilkinson: I think that the hon. Member for Bethnal Green and Bow (Mr. Mikardo) is being a little harsh on the solicitor. He should really be harsh on me, not the solicitor. The solicitor was clearly giving advice on another piece of legislation which the hon. Member for Hackney, South and Shoreditch (Mr. Brown) rightly reminded the House had been passed earlier today. I was erroneously seeking to raise the issue of flood control in South Ruislip. Perhaps you, Mr. Deputy Speaker, would advise me whether it is possible to raise that subject as there are measures in the schedule—for example, the Ilford Corporation (Drainage) Act 1950—which refer to flood control measures.

Mr. Deputy Speaker: If, as I assume, Ruislip is in London, the answer is that the hon. Member may refer to it.

Mr. Wilkinson: I am garteful to you, Mr. Deputy Speaker. Your ruling is as had anticipated, although I have been quite rightly reproved by the hon. Member for Bethnal Green and Bow.
I revert to the question of flooding in the Greater London area. However, under the scheme no work could begin on any river catchment area other than that of the River Brent until the Brent river flood control works were finished. The River Crane catchment area, which includes the Yeading Brook, in my constituency, has the next highest priority. Surely the positive approach would be to initiate design work on the South Ruislip flood control culvert and start concurrent negotiations with London Transport and British Rail so that the construction of the culvert and related works can begin as soon as the River Brent flood control scheme is completed.
That seemed to be the approach of the GLC, but we now learn that a shortage of design staff means that the necessary construction work in South Ruislip will not start until 1984 and probably will not be finished until 1985. I understand that authorisation for the engagement of a further 22 design staff has been given and that the interviewing of applicants has begun.

Mr. John Page: Everything said by my hon. Friend about Ruislip is of intense interest to the people of Pinner and concerning the River Pinn, which overflowed on the same night. Is he suggesting that the delays in the design work being started are because the GLC wishes to employ 22 new experts on this matter? I should have thought that that was an inferior practice. There may be consulting engineers ready to deal with this matter. I should be indebted to my hon. Friend for his advice.

Mr. Wilkinson: I asked that very question. My feelings and initial judgment were the same as those of my hon. Friend the Member for Harrow, West (Mr. Page). The advice that I received was that previous experience had taught experts in the GLC that it was best for them to engage appropriate staff themselves. My instincts were entirely those of my hon. Friend.
Anyway, I suggest that, as soon as these gentlemen are hired, they be engaged on the South Ruislip project, bearing in mind that the original target date for completion of the project was 1982. The slippage which has occurred is of acute local concern. As I said, the total cost of the works is about £500,000. The total cost of the flood control measures in RCS110 is £81 million. The damage that was caused in Ruislip Gardens in 1977 was £750,000. Therefore, the project is not a local amenity issue; it is a cost-effective programme which is necessary to protect the property of my constituents. Unless urgent steps are taken to speed things up, I shall seek every means such as exploiting schedules to Bills of this kind to raise the matter again.

8.19 p.m.

Mr. Ian Mikardo: I should like to make a few observations on the Bill. If I may offer a word of comfort to the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who has just spoken and who got into a bit of a jam, I hope that he will not take it too much to heart. We have all dropped that sort of clanger in our day and survived it. I dare say that he will.
I am sure that the House is grateful—I certainly am—to the hon. Member for Streatham (Mr. Shelton) for the clear and concise way in which he took us through the clauses of the Bill and straightened


out any complexities that there might be in it. I join my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) in thanking the hon. Member for Streatham for the way in which he moved the Second Reading.
As has been said, this is a relatively, though not altogether, non-controversial Bill. That is why it has had a relatively easy passage so far any why, I believe, it will continue to have an easy passage this evening. I hope that those who sit in County Hall will not make the mistake of deducing from that that there will be any lack of vigilance in the House about what they are up to or about any further measures which they may seek to introduce.
Some of us are highly suspicious of what the Greater London Council is up to and deeply disturbed by some of the things that it is trying to do. I hope that those in County Hall will not become complacent because the Bill receives a Second Reading this evening. I hope that they will inform their solicitor not to tell Members of the House what is or is not in order to discuss on a Bill. If he continues to do that, one day he will be kicked very hard in a sensitive part of his anatomy.
There are two or three parts of the Bill to which I wish to refer, following what was said by the hon. Member for Streatham. I refer first to clause 7, which, as he explained, moves the control of parking on footways, grass verges, and so on from one authority to another. It does not matter who is responsible for controlling such parking. What matters is that it is controlled. The degree to which it is controlled varies considerably from one area of London to another.
I was pinched—quite properly, and I make no complaint about it—and fined. I pay tribute to the vigilance of the policeman who noticed it. I was pinched for leaving my car parked in a square in Westminster with the nearside rear wheel just on the pavement. For that, I got it, quite properly, where the chicken got the chopper. I should like to take hon. Members and the Commissioner of Police for a walk, any day of the week during the hours of eight in the morning to six in the evening, down Hanbury Street, E1, which runs eastwards from Commercial Street and crosses Brick Lane. There is

not one yard of that street—it is a narrow street with narrow footpaths on either side—which, for seven days a week, not five, does not have vehicles parked on it within 1ft of the wall of the buildings. People walking down Hanbury Street have learnt to move no longer as homo sapiens but as crustaceans. They walk sideways, because the only way that one can walk up Hanbury Street is sideways between the vehicles and the walls. There is not room to walk straight forward.
I do not believe that that would be permitted for one minute in the more delectable parts of the borough which the hon. Member for Hampstead (Mr. Finsberg) represents. It certainly would not be permitted for one minute in the city of Westminster where I live. How is it that it goes on with impunity in an area where only working people live? Is that the reason? If not, what is the reason? I repeat that what clause 7 does, by transferring control from one authority to another, is meaningless. What is meaningful is the extent to which the control is implemented.
The provisions in clause 8 about the machinery are relatively uncontroversial, though, as was said by my hon. Friend the Member for Hackney, South and Shoreditch, who is a great expert in these matters, they are not altogether uncontroversial. However, as my right hon. Friend the Member for Battersea, North (Mr. Jay) said, the principle is very fundamental indeed. One day we shall have to look at this principle. It really will not do in a conurbation such as Greater London to imagine that one can satisfy the needs of the people with about 30 pockets of housing administration.
We have been saying for years that what we need in this country is more mobility and that people should be able to move in order to change jobs. My right hon. Friend the Member for Battersea, North gave graphic instances of the way in which mobility worked. The instances that he quoted were for social reasons—widows who wanted to be with their children, or the daughter who wants to move to be near her ailing mother to give her a hand—and, for heaven's sake, why not? But there are other instances.
I put a point to the hon. Member for Ravensbourne (Mr. Hunt). He seems to have missed it, but I am sure that he is


conscious of it. At my last advice bureau but one I saw a chap who lives in Bethnal Green. He lost his job and now has the chance of employment in the West Essex fringe of the Greater London area. He starts at six o'clock in the morning, and he does not have a car. There is no way in which he can get public transport from Bethnal Green to the Essex border to be at work by six o'clock in the morning. It was precisely for that sort of case that the system of nominations from the boroughs to the GLC was developed. Although it did not work by any means perfectly, and although there were many snags about it, it made a real contribution to deal with that sort of case.
I do not believe that this vague, co-ordinating get together will be a substitute for that system of nominations, and I do not know anyone who believes that it will. Somehow or other we must find a way of creating housing mobility. If the GLC does not want to do it, some other way must be found. We must find a way of creating housing mobility in Greater London, otherwise we shall get a situation in which the social and economic life of Greater London will be fossilised because people will be locked in the boroughs in which they live, and in employment terms will be locked within the public transport accessibility radius of those boroughs.
Labour Members enjoyed openly, and Conservative Members must have enjoyed a little wryly, the outcome of the research undertaken by my hon. Friend the Member for Hackney, South and Shoreditch into the peripatetic gyrations of the Conservative Party with regard to the guarantee of loans in designated districts. Before I speak on this, I must declare an interest as the chairman of the Tower Hamlets centre for small business, which exists to promote small businesses in the borough. It is a highly non-financial interest that I declare, because the office of chairman of this centre is a highly unpaid one. Nevertheless, I declare the interest.
The hon. Member for Streatham posed a valid question, namely, that some people may ask "Why should a company have to look to the local authority? Why does not the normal banking and financial system satisfy it?" The hon. Gentleman found one answer to his question. I shall provide a different answer, from

which he may not altogether dissent. It is that the banking and financial system is incompetent and too narrow and too unimaginative to deal with it. It works in Germany, France and Holland, but our financial organisations are much more conservative, much less inclined to lending except on stone bonk assets than are the banking and other financial institutions in the other countries of Western Europe. That is the reason that I put to the hon. Member for Streatham why provisions of this sort must be there. Doubtless it is a belated understanding of that fact which has brought Conservative Members to abandon the views which they expressed a little while ago.
My hon. Friend the Member for Hackney, South and Shoreditch ought not to worry about this. He ought not to complain about the inconsistency of Conservative Members and about the fact that they are now promoting something which they bitterly opposed. Has my hon. Friend forgotten that there is more joy in heaven over one sinner that repenteth? He is witnessing something that we should all applaud. The Minister—the hon. Member for Hampstead—has been smitten by a blinding light on the road to the Front Bench. We should all be glad of that and grateful for it.
We know why we ought not to spend much time dealing with part IV. It has been explained that we shall be having a separate look at that. However, I should like to make one comment about hostels. Hostels are like prisons, borstals and airports, in that everyone is in favour of them if they are put somewhere else. Everyone appreciates that we must have another airport—"But not where we are; put it somewhere else". We understand that there may be need for another prison because we are short of prison accommodation—but there is a very good reason for putting it somewhere else. It is the same with a borstal, a mental home, a mental hospital or a hostel for alcoholics, vagrants, handicapped persons or other under-privileged persons. No one wants such things near himself. Everyone is in favour of them as long as someone else is their neighbour.
Having said that, I believe that we really ought to look at the distribution of these social institutions through Greater London to see where they are


and how it is that some people in some parts of Greater London—Hampstead, Westminster, Kensington and Chelsea—manage to achieve the desideratum of having them somewhere else. Let us look at East London. Of course, it is not 100 per cent. one way or the other. However, I ask the Minister to get a map of Greater London and to mark out and list all the institutions to which people, reasonably or unreasonably—sometimes they are unreasonable—could take exception in their locality. Let him look at the relative density of such institutions in various parts of London. He will find it highly instructive.
Finally—resisting, gravely, the temptation to have a long dissertation on the brown-tailed moth—I move to clause 23, which is concerned with the matter of putting tables and chairs in cafes, pubs and other places. Perhaps I may confess to a personal weakness. I love to eat and drink outdoors. I think that it is one of the attributes of civilisation to eat and drink outdoors, whenever the weather allows. When people ask why there is so much less of this in London than in other countries, others will sometimes say "We have this terrible climate" But our climate is no different from the climate of Amsterdam, Brussels or Paris, and on the whole it is better than the climate of Berlin, where eating and drinking outside is commonplace.
But there is a "but". The habit has been greatly increased by the business of putting porches out on pavements. Our planning authorities must adopt a more flexible approach. There are snags and grounds for resistance, but we need to be more flexible if we are to encourage outdoor eating. A soft roof and some element of heating make it pleasant to sit under an open awning in autumn as well as on a summer evening. We do not use our imagination in the way that they do in some Continental cities and in North America, where the climate in the north and east is, by and large, worse than ours. Pavement life adds much to the gaiety of a city, and we should have more of it. It requires imagination from the restaurant, cafe or pub owner and more flexibility from the planners.
I shall not be unhappy for the Bill to have an unopposed Second Reading, but in Committee we must look more

closely at one or two things. To end as I began, I warn the chaps in the big building on the other side of the river that they must not be too complacent after this evening and imagine that their deeds will go unwatched and their intentions unexamined.

8.37 p.m.

Mr. Guy Barnett: I congratulate the hon. Member for Streatham (Mr. Shelton) on the way in which he brought the Bill before the House and explained it. I also congratulate, or commiserate with, the hon. Member for Hampstead (Mr. Finsberg), who finds himself in the seat that he now occupies.
Clause 9 has been mentioned several times, and my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) spoke of the Government's attitude. One enormous difference between the situation when the Conservative Party in its previous incarnation opposed that clause and now is the existence of the Inner Urban Areas Act. That Act gives the designated districts with which the Bill is concerned the sort of powers which they require, except the power which is contained in the clause.
I am interested to know the attitude of the Government to this clause. The Under-Secretary of State may not be able to tell us this evening, but perhaps he will do so later. If there is to be an extension of powers to local authorities to enable them to assist industry in their areas, that should be done nationally in terms of relative national need. That is why the then Secretary of State designated certain districts not just in London but in the country at large.
I might feel some misgivings if the Government were inclined to allow local authorities in different parts of the country to outbid one another in claiming powers through private legislation which enabled them to compete with the kind of wares which might be available to them for attracting industry to their areas. Attractive as it might be to those of us who represent London constituencies to see our own local authorities acquire powers which might enable them to have the edge over other local authorities, it could well be that if local authorities began outbidding each other in this way London would be worse off than it is now.
The districts that are mentioned in the Bill are precisely those which have been singled out for special assistance under the Inner Urban Areas Act. The hon. Member for Streatham drew our attention to the relative rates of unemployment in the Greater London area as a whole, and dockland in particular. It was precisely because the situation in dockland was so serious that not merely was it made a designated area under the Act but it was given extra powers as a special area. That gave it priority or preference over designated districts. I shall be most interested in the Government's comments on this matter.
Can the Minister say whether the Government would accept the situation in which powers of this kind were acquired by local authorities without the necessity of any sanction from central Government, and without any necessary financial limit being placed upon the size of the guarantee that might be made? I recognise that the Minister might not be in a position to answer those questions this evening.
In other respects I find the Bill relatively non-contentious. Although there are issues upon which several hon. Members have expressed doubts and reservations, most of these can be cleared up in Committee, and I personally have no intention of dividing the House on the Bill.

8.43 p.m.

The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): The Greater London Council (General Powers) Bill is one of those annual events which draws, depending on whether there is an election in the offing, more or fewer London Members. In that respect, it is like the Consolidated Fund Bill. Tonight, in the aftermath of a general election and the European elections, there are fewer London Members present. That may also be due to the fact that this is a less interesting Bill than usual.
Briefly, I shall answer one or two of the points that have been made and then give an indication of the Government's attitude to the Bill. I congratulate my hon. Friend the Member for Streatham (Mr. Shelton) on the way in which he introduced the Bill. He did so with great skill, and there is no excuse for any hon. Member to fail to understand the

Measure's contents or the reasoning behind it. Some of my hon. Friend's arguments were not unfamiliar because we have been over part of the course on at least one other occasion. The major arguments put forward by my hon. Friend should convince the House that the Bill deserves a Second Reading.
The hon. Member for Hackney, South and Shoreditch (Mr. Brown), whom we welcome back from Europe—perhaps Europe will welcome him back here—made his usual intervention in a London debate. London debates would be very much poorer without his interventions.
The hon. Gentleman's remarks on the transfer of estates were not germane at all to this Bill. However, they were a useful rehearsal for the debate which no doubt we shall have when the transfer order is debated. It will certainly help whoever has to deal with that matter to know the kind of arguments the hon. Gentleman will adduce on that occasion.
I do not grumble at the fact that the GLC has produced a fairly thin Bill, because that fits very much into the philosophy of the present Government—namely, that there has been far too much legislation in the past. I hope that the GLC will not be tempted by the hon. Gentleman's remarks into filling up its Bill next time. I do not use the phrase "filling up" in the accepted Private Bill sense but in the sense of finding more clauses containing more powers.
The hon. Gentleman spoke as though the GLC were unpopular, and indeed he said what a bad organisation it was. That was certainly not proved by election results in the GLC area when the swing against Labour was almost identical to the earlier swing against Labour. The people of London are happy with what the GLC is doing. Their votes prove it, particularly in the constituency of Holborn and St. Pancras, South, where the swing in the election, compared with 1974, was the same 10 per cent. against Labour.
My hon. Friend the Member for Ravensbourne (Mr. Hunt), in a most helpful speech, added extra information to what we already knew. His remarks about the estates managed by the GLC in Bromley were useful in the context of accepting that local borough management of housing must bring matters closer to the tenants, which is the whole object of


the exercise. A local borough is usually in a better position to keep in touch with tenants' problems than is a county, irrespective of its political control.
The right hon. Member for Battersea, North (Mr. Jay) was predictably against the transfer of estates, and certainly against the sale of council houses, but those two policies appear to me to be the wish of the electors and of the tenants, otherwise I would not be on this side of the Chamber.
I welcome to our London debates my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) from his previous Yorkshire incarnation. It was helpful that he brought to the notice of the House the flooding problems in his constituency—exactly as I would expect any constituency Member to do. My hon. Friend may wish to know that there ore some nasty episodes of flooding in Hampstead, and I hope that they, too, will be dealt with. I make that remark, as did my hon. Friend, strictly in accordance with the Bill and its long title, which uses the phrase "and for other purposes".
The hon. Member for Bethnal Green and Bow (Mr. Mikardo) mentioned parking on footways. He must not believe that such problems do not also exist in Hampstead. I could take the hon. Gentleman to many streets in so-called salubrious Hampstead which are permanently blocked by vehicles on the pavement. One of the reasons for this situation arises from the shortage of police manpower. I believe that the increase in the number of police which we hope will follow from the recent pay award will begin to make an impact on this problem. I have an odd feeling that anybody who parks in Hanbury Street after this debate has been read in certain quarters may find things slightly warmer than has been the case so far.

Mr. Mikardo: I believe that is right. We have all talked to the police. They always say that they do not have enough manpower for constant vigilance, and, of course, they do not. However, I do not understand why they do not use the occasional blitz technique—it does work. The bus drivers refused to drive down Roman Road in my constituency and the police had to do something about it.

Every six weeks, they or the traffic wardens come down that road on a Saturday, hand out tickets and tow away vehicles. For the next four weeks everything is lovely. Then the problem starts to drift back and the operation is repeated. If the police were to spread out their manpower intelligently in that way, much good could be done.

Mr. Finsberg: I am grateful to the hon. Gentleman. He is perfectly right and I shall see that those remarks are drawn to the attention of the Commissioner to see if there is anything more that can be done.
I understand that the basis of this clause is that it is felt better that the power should be exercised under a Government Act rather than an Act promoted by a local authority. It is not a change from one to the other, but the provision will be strengthened by being part of a Government Act when it comes into force.

Mr. Ronald W. Brown: The problem of police power is that an obstruction has to be identified. If parking on the pavement is not an obstruction, the police cannot handle it. That is why on 1 October 1980 the police will be able to take action against parking on the highway.

Mr. Finsberg: One can recognise an obstruction if one has to scuttle crabwise past it, as the hon. Member for Bethnal Green and Bow told us occurs in Hanbury Street. There are similar obstructions in Belsize Lane or Birchington Road in my constituency. I am sure that all hon. Members can repeat the story.

Mr. Michael Neubert: Will my hon. Friend indicate whether the Government accept the commitment of section 7 of the Road Traffic Act 1974 being brought into effect on 1 October 1980? Even that date is a long way away and the problem is with us now.

Mr. Finsberg: My understanding is that that is so. That is precisely why the GLC has asked for the withdrawal of its powers in the Bill. If my hon. Friend has any doubt about that, I shall ask my right hon. Friend the Minister of Transport to write to him on the matter.
The hon. Member for Bethnal Green and Bow referred to cafes and open-air restaurants. Again, he is right that we are not enterprising enough in this country.


I hope that the Bill will give the green light to restaurateurs and so on so that the public will begin to demand these facilities more and more.
The hon. Member for Greenwich (Mr. Barnett) uttered some sound words about clause 9. I shall refer to his remarks later.
I should like to give the House an indication of the Government's attitude to the Bill. For the most part, we have no objection to what the GLC seeks to achieve. Its proposals have been discussed with its representatives and we shall be setting out our views in due course in our customary report to Parliament. The provisions about hostels may well be withdrawn because we do not feel that they are satisfactory. The GLC may prefer to have them reintroduced next year in a more acceptable form.
I hope that my hon. Friend the Member for Streatham will forgive me, but I regret that in his excellent introduction to the Bill he made no reference to schedule 1. I should be fascinated to know what section 191 of the Erith Tramways and Improvement Act 1903 was, since we are being asked to repeal it. Perhaps if my hon. Friend catches your eye, Mr. Deputy Speaker, and obtains the leave of the House to speak again, he might tell us.
There are two points about which I wish to comment, the first being clause 8. It provides for the Secretary of State to establish a staff commission to oversee the transfer of Greater London Council staff both to the borough councils and to certain district councils outside London in connection with the transfer of housing from the GLC to those authorities. This Bill in no way deals with the principle of the transfer of GLC estates.
The Government regard a statutory staff commission as an essential means of protecting the interests of those staff affected by the transfers. I therefore welcome this clause and strongly commend it to the House. I believe that this will not be controversial, since the previous Secretary of State, the right hon. Member for Stepney and Poplar (Mr. Shore), took the same line at the end of January.
My right hon. Friend the Secretary of State proposes to establish the commission directly this clause becomes law. In the meantime, we hope it will be pos-

sible informally to announce the names of its members and give them an opportunity to become familiar with the terms and conditions and all that is involved. We are at present consulting the local authorities and unions involved on the membership and asking them for their views, and we hope to be able to make an announcement about this very shortly.
My right hon. Friend will in due course lay orders before the House providing for the transfer of staff and property to those authorities that have so far requested him to do so. As has been stated, those authorities are not of one political persuasion. The negotiation of transfer terms and associated arrangements are essentially a matter for the GLC and the other parties involved, and I believe there are not many issues still to be resolved between them. I hope the parties can reach final agreement soon—perhaps with the help of some neutral umpire, though I am not volunteering for that role myself.
Be that as it may, the Government whole heartedly suport the GLC's wish to transfer its housing management responsibilities at the earlier possible date. However, the intervention of the general election has meant that progress towards laying the necessary orders and, in particular, the passage of the Bill which proposes the commission have been delayed. Of course, I am not complaining about the election. I am glad that we had it.
The commission must be formally established before the first date on which staff are to be transferred, and the commission can be formally established only when this Bill is on the statute book. Therefore, I think it is realistic to take 1 January 1980 as the date for transfer, and I hope that all concerned will proceed accordingly.
I turn now to clause 9. I am grateful to the hon. Member for Hackney, South and Shoreditch for reminding the House of the eloquent speech that I made from the Opposition Benches on a previous occasion. I think that his words were even more flattering than that. I should remind him, however, that I made not one, but two speeches. He needs to read both of them in order to appreciate the full flavour of those debates.
I remind the House that earlier in this speech I said that the hon. Member


for Greenwich had uttered some sound words about clause 9. The Government are firmly opposed to clause 9, which would allow the guarantee of loans in designated districts. I recognise very clearly—and the House would not expect me to say anything else—the desire of local authorities to participate in efforts to promote industrial development in their areas.
There is no doubt that local authorities can help to create a better environment for the development of industry through sensitive planning policies and procedures. However, the Government are concerned at the prospect of what I might call a proliferation of powers for local authorities to give financial assistance to industry, whether by means of loan guarantees, as in clause 9, or by giving grants or loans on favourable terms. I have to remind the House that such powers are being sought in several of the Private Bills at present before the House.

Mr. Mikardo: What is wrong with that?

Mr. Finsberg: My reason for taking this view is perfectly clear. At a time when this new Government are taking a critical look at the extent of their own powers of assistance to industry, it would be wrong for local authorities to obtain new powers in this area. We will therefore oppose provisions in all the local authority Bills now before Parliament which contain any new powers to assist industry or any extension of the life of existing local powers beyond 1984. The power which the GLC is seeking is a new power and a substantial one. It would not only be new to the GLC; it is one that is held by no other local authority in the country. We believe that this must await any review of general policy which we carry out.

Mr. Mikardo: What the hon. Gentleman has been saying makes it manifest that all that he and other members of his party said before and during the general election about helping small business was a piece of arrant hypocrisy. The first time that we get something in this House to help small business, the Tories are against it.

Mr. Finsberg: Doubtless the hon. Gentleman did not hear the Budget, which

certainly helps small business. If he bothers to read the first speech to which I referred, he will see that there are many other powers available to help small business. This local power cannot be brought in while the Government are reviewing the scope and extent of their own powers, and I do not accept the words the hon. Gentleman has used.
I ask the House to give the rest of the Bill a blessing and a Second Reading so that it can go to a Committee which can examine its provisions in the usual detail.

9.3 p.m.

Mr. Ted Graham: I should like to speak with particular reference to clause 8.
I join in the commendations which have been made of the hon. Members for Streatham (Mr. Shelton) and for Ravensbourne (Mr. Hunt), who have, quite rightly, said that this is a modest debate. There is not a great deal of controversy in it and yet we have already heard, particularly in the comments from the Opposition Benches, that there is a great deal of disquiet about clause 8. The Minister was right to say that the clause does not deal directly with the transfer of property. Nevertheless, it does deal with the protection and conditions of the employees who will be involved in the management of the properties which are to be transferred.
When, as in the London borough of Enfield, there is the unholy alliance of a Conservative council and the Conservative GLC, there are a great many people there for whom this is not good news at all.
Let me begin with a confession. I am certainly not one of those who are against the sale of council houses, and I am certainly not against the spread of home ownership, but I am definitely one who, attending his surgery as often as he does, hears the stories of misery and despair of many constituents for whom the only possibility of escape from some of the conditions in which they live—principally in high-rise tower development—is to get what they always speak of longingly as ground floor development with a garden.
In the London borough of Enfield we have the sad spectacle of 7,000 families on the waiting list and 7,000 on the transfer list, their great hope primarily being to escape from high-rise development or to


get into council housing, and for this purpose we must keep in our housing stock the very houses which are likely to be sold.
It is all very well to speak of transfers of staff. I was a member of the council of the London borough of Enfield in 1964, 1965 and 1966 when we experienced the great trauma of the transfer of staff from Middlesex and from the LCC. I am fully conscious of the need to have adequate protection for the pensions and conditions of work of the employees. But in what will they be engaged? It will be in the management of property, and we have already seen that the GLC is anxious to get out of housing as quickly as possible. Enfield also wants to get out of housing as quickly as possible. Therefore, the staff who will be transferred, whether directly or indirectly, into the housing department of the London borough of Enfield will be engaged in helping in that process.
I made some inquiries today and I must tell the House that, although there has been reference to the transfer of estates and the staff who will be involved, we have no GLC estates as such in the London borough of Enfield. We have about 400 properties. The former authorities of Southgate, Enfield and Edmonton were not engaged in GLC estate building. Southgate built very few council houses. Edmonton had its own direct labour force, and Enfield followed it in a great many respects. In fact, the GLC has some 400 properties in Enfield, and it is engaged in selling them off as fast as it possibly can to anyone willing to buy them.
One of the most treacherous acts perpetrated between the GLC and the Conservative London borough of Enfield in the past few years was the way they treated the Klinger site in Silver Street, Edmonton. This was a site bought by the GLC in the late 1960s and developed in collaboration between the GLC and the council, whether Labour or Conservative, over the past 10 years. It was developed in order that houses would be made available for rent primarily for people to be transferred there from high-rise development and the like.
Then, last year, the deadly deed was done. The GLC decided not to continue the collaboration with Enfield, so that it

would not substantially be Enfield waiting list and housing transfer people who would occupy those dwellings but the houses would be sold. Thus, 350 houses which were built for rent are now to be put on the open market at prices which I frankly doubt that many people will be able to afford. Indeed, I hope that the GLC will have the greatest difficulty in selling those houses, which would have done so much for my constituents.
The GLC and the Enfield council will talk about giving council tenants the right to buy their own houses, and we now understand that if people have lived there for a long time the discount will be 50 per cent. Whose assets do the Conservatives think they are distributing? They are community assets. The asset belongs not just to the person living in the dwelling but to the ratepayers and taxpayers of the country as a whole.
The Conservatives are determined in their dogmatic approach to get out of housing and to give lucky tenants who have lived in their homes for years—lucky tenants living in desirable houses—the opportunity to purchase. Staff who have been transferred will take part in a process that will be socially divisible. A great many people are buying their houses for the first time and they have to pay the market value. They will bitterly resent the fact that a council house tenant has the opportunity to buy his own home at a bargain price after having lived in it for a long time.
The Bill will not be opposed, but it contains, especially in clause 8, a sad continuation of a saga that is socially divisive. For my constituents that will mean the continuation of their deep desire to obtain better housing. The Bill will do nothing to aid that process.

9.12 p.m.

Mr. Michael Neubert: I welcome the annual opportunity afforded by the Greater London Council (General Powers) Bill for a discussion of issues concerning our great capital city, although three brief hours are scarcely commensurate with the scale and importance of London in our national life.
I have to acknowledge, as others have done, the insubstantiality of the Bill before us today. With the Minister's announcement that the Government are to oppose clause 9, it becomes a very


slight measure indeed. In certain respects it is expressly disappointing. If the Bill is an expression of Conservative opinion that less legislation is healthy, I can support it. However, there are at least two respects in which the Bill disappoints me where delay is foreseen in matters which are pressing and which require firm action now.
First, I refer to the powers to control parking on footpaths and grass verges. I have the good fortune to represent a constituency in one of the leafy outer London boroughs which so exercise the resentment of Labour Members who, for political effect, on so many occasions seek to strike a division between inner London and outer London.

Mr. Michael English: Not all Labour Members. To some of us they are both the same.

Mr. Neubert: That may be the view of the hon. Gentleman, who represents part of the East Midlands. He is entitled to express a view, and we welcome him to our closed society of London Members.
In towns such as Romford, there are roads which have the benefit of grass verges which are being spoiled and damaged irreparably by the parking of cars. In one road there has recently been a great detraction from the amenities. The local council has found it necessary to cut down several mature lime trees. The road has grass verges, and there is a constant problem with the parking of cars on those verges.
In my correspondence with the council I was referred to the predicament that both the Road Traffic Act 1974 and the Greater London Council (General Powers) Act 1974 contain powers yet to be implemented. We are told that the reason for clause 7 is that the Greater London Council wishes to withdraw its power in favour of the Government in order to avoid duplication. That power will not be implemented until 1 October 1980, which is 18 months away, and I find that disappointing.
That is a problem, although it does not affect the working-class area of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), as he insists on describing it. The hon. Gentleman would no doubt be amazed, if he were in the Chamber,

to learn that only a few years ago I worked in Brick Lane. It is no good his coming here complaining about the absence of enforcement of parking conditions in Hanbury Street. If he has ever tried to park a car in that locality, he will know that the facilities are not there. Motorists do not park on pavements with the intention of annoying local residents. They do so because they have no choice.
Anybody given the choice of parking without charge in a proper place would do so. However, in such areas and in other parts of London, there is not the parking capacity to meet the demand. It is not enough for us to press for greater controls and an increase in the power of the police to enforce them. We must look to the greater problem, that of providing adequate capacity for parking in London's busy streets.
The Minister indicated that the Government felt that at this time of a general review of assistance to industry they could not support clause 9.
On the previous occasion when we debated this issue, the then Minister implied that we could not at any time discriminate positively in favour of London. I do not think that that is a valid argument.
As our capital city, London is in unique circumstances. It has a unique claim to different treatment. There is no question of London being treated like any other major city or region of high unemployment. London must be looked at in a different light. There may well be a case for certain powers being conferred on the Greater London Council and not on any other local authority. I should be prepared to support that in principle.
I wish to see an area such as dockland, with its high rate of unemployment, supported in any way possible. I should be prepared to resist the arguments of hon. Members representing other regions of the country against such a proposal even though it would mean setting a precedent.
We are told that part IV of the Bill will lapse in Committee. Here I express my disappointment. The problem of hostels is urgent. I should like to correct an impression given by the hon. Member for Bethnal Green and Bow that this was the concern only of privileged parts of London—expressly the Royal borough of Kensington and Chelsea. He also gave


the impression that this related solely to hostels for social welfare purposes.
As I understand it, the major purpose of the clause is to control the use of hostels by people staying overnight who overflow London hotel accommodation and who find it difficult to find any other accommodation in the centre of our attractive city. Tourism is immensely popular in London—at least to those who visit London but not always to those who live here. There are problems related to properties being used as hotels overnight without the necessary controls.
As the problem of greater numbers of visitors to London is not noticeably decreasing, I regard the registration of hostels as urgent. I greatly regret that the proposals are not in a form that is acceptable to the Government. Apparently it will mean another year before we can come to them again.
Hostels may be a nuisance to local residents. The case that came to my attention was not in a privileged part of London. It was in the London borough of Newham, where the taking over of a substantial, formerly privately occupied house by a hostel to accommodate drug addicts, derelicts and other layabouts has caused a nightmare for other people endeavouring to live a normal, decent life in that residential street. The occupants of this hostel apparently sleep during the day—they have no other call on their energies—and they make the nights hell on earth for the people who live next door, causing people who must work and children who go to school to have sleepless nights and bad health. We have an obligation to those who are unfortunate, who have no other accommodation, or who find it difficult to find gainful employment, but we must also recognise the need of people to lead reasonable lives. If the local authority could be given greater powers of control over such hostels, it would find it of great assistance in a case such as the one that I have mentioned.
I turn to clause 22, and, at the risk of destroying the gravitas of my speech, I have to point out, coming from the London borough of Havering, that the control of the brown-tailed moth is a very live issue there. It is not so in Romford, in the north of the borough, I am glad to say. The caterpillars of this moth

certainly cause a very painful rash. Although it may seem extraordinary to most people that it is necessary to enact legislation to secure the eradication of the brown-tailed moth, I support the clause. I hope, however, that this will not bring me into trouble with the animal lobby. After the campaign to put animals into politics, I hope that my advocacy of the eradication of the moth will not lead me into difficulties with my constituents.
I wonder, in passing, how it is to be established where the moths are to be found. Does a local enforcement officer get the instruction "Follow that moth"? Does he go to the owner of the property and say "You are suspected of having moths on your property"? It seems absolutely like Disneyland in its concept.
I welcome clause 23, which would provide for the control of tables and chairs—and perhaps even sun umbrellas—on the pavements of London. I welcome it not because it is something novel to London—it is to be found in many places—but because it seems to be symbolic of an acceptance that tourism is of prime importance to London. I hope that it indicates that tourists are to be welcomed. They have a great contribution to make not only to national prosperity but to the prosperity and welfare of London itself.
When we consider how much is contributed by tourists to the public transport services, we realise that without that contribution we would have a skeleton service on our trains and our buses. In addition, many small businesses, many shopkeepers, depend upon the extra revenue which comes from foreign visitors and visitors from other parts of the country to London.
Even though we do not have the spacious boulevards of Paris, we should none the less have some of the amenities of that lovely city, with people dining and drinking at tables on the pavement. The very existence of clause 23 will, I hope, once again underline the commitment of all those concerned for the future well-being of London to the importance of tourism.
With those remarks, I welcome the Bill. I hope that some of the measures in it will be implemented rather sooner than is anticipated and that it will have a very rapid passage through this House.

9.23 p.m.

Mr. John Cartwright: I follow the hon. Member for Romford (Mr. Neubert) in referring initially to clause 7, because I believe that the problem of parking on pavements is a growing menace in many parts of London. It is not just the odd car with a couple of wheels on the pavement; it is very often a car with all four wheels on the pavement or, worse still, it is the problem of heavy lorries parked on the pavement. There is not just the question of the impact on amenity, in the sense of the look of the thing, which is disgusting enough, I accept. There is the damage done by this sort of practice, particularly when heavy lorries crunch across the paving stones, leaving them shattered for the ratepayers to repair afterwards.
We often forget the impact that this practice has on the disabled, and on the blind in particular. A campaign was launched last week by a number of disabled groups and by the Pedestrians Association under the general title "Give us back our pavements". It ought to have a lot of support in this House. The disabled, and the blind in particular, ought not to have to contend with these extra hazards of parked vehicles on pavements.
Although I accept all that has been said in the debate about the operation of section 7 of the Road Traffic Act 1974, the position does not seem to be quite as explicit as some hon. Members, and particularly the Under-Secretary of State for the Environment, have suggested. The GLC has provided us with an excellent and very helpful brief. Perhaps I ought to say this in view of some of the stern words of my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) about the GLC solicitor. The brief referred to section 7 of the 1974 Act and said that the Secretary of State in a previous Government announced that it would be made fully operative on 1 October 1980. However, the brief goes on to say that the intention of the present Government is not yet known. There seems to be a less clear-cut situation than that presented to us.
I hope that when the hon. Member for Streatham (Mr. Shelton) replies to the debate he will make it clear that, if there is any delay in the operation of section 7 of the 1974 Act, some attempt will be made to use the GLC's current powers

which are to be repealed only contingently on the operation of section 7.
Referring to clause 8—the transfer of GLC housing staff—the principle of transfer has to some extent been dealt with. Like the Under-Secretary of State, I have always been in favour of housing being managed as near as possible to the tenants. It is a good thing for the tenants. It is also a good thing for elected councillors who are responsible for providing the services. One of the great indictments of GLC housing is that people sit in an ivory tower in County Hall and take decisions about estates that they have not seen and are unlikely to see. Therefore, it is a good thing to manage housing as close to the tenants as possible.
Many GLC tenants in Greenwich will be strongly in favour of being transferred to the Greenwich council, first because they see much lower rents in Greenwich housing than in GLC housing. For example, the average rent increase for Greenwich council housing was 20p compared with £1·50 for similar housing on GLC estates in Greenwich.
It is also true that many GLC tenants locked up in high-rise flats regard transfer to the borough council as the only way in which they will get houses. They sit in those high-rise flats, often with young children, on the sixth, seventh or eighth floor of a block, and look down and see houses empty week after week and month after month and they know that there is no way in which they can have those houses. Why? Because they have been put up for sale. Some houses in my constituency have been empty for eight or nine months because they have been put up for sale. Therefore, GLC tenants say "We know that the London borough of Greenwich is not selling its houses. The best chance for us to get houses with gardens for our children is to be transferred to the London borough of Greenwich".
I accept what others of my hon. Friends have said about mobility. I understand that the problem of transferring from one part of London to another has been made easier by the operation of the GLC's housing schemes. On the other hand, I notice that there is to be a mobility scheme attached to the transfer of GLC housing. I understand that the scheme will require between 20 per cent. and 50 per cent. of the net vacancies in transferred


property to be reallocated by the GLC to other needy boroughs in London. No doubt the aim is laudable, but the thought of two boroughs and the GLC being involved in the exercise makes me wonder how much bureaucracy will be entailed and how long it will take someone to get a transfer from, for example, Hackney to Greenwich when so much red tape is involved, with three local authorities handling the operation.
Coming to the question of protection of staff, which is what the clause basically is about, I accept that we should protect the standards and position of the transferred staff of the GLC. But we should also have some regard to the standards of the borough staff who will have GLC transferred officers working alongside them. I understand that the proposal is that not only the income of the transferred staff but conditions of service, hours of work, overtime and bonus schemes shall be protected. In that situation, harmonisation of the two groups of staff will be a costly and difficult exercise. If we have two groups of staff—one transferred from the GLC and one existing in the borough—on different rates of pay, different standards of overtime conditions, for example, and totally different bonus schemes, it will need a lot of delicate and difficult adjustment to sort out that problem.
I understand that powers will be taken to restrict the boroughs when it comes to the appointment, replacement and promotion of staff. That again is something which I believe will cause difficulties, with staff who have worked for many years for a borough housing department finding their promotion opportunities blocked by staff coming in from the GLC. It is therefore very important that in protecting the standards and conditions of transferred GLC staff we ensure that it is done fairly.
I hope also that when we talk about standards we remember the standard of service to tenants. Certainly in my experience the standard of maintenance which the GLC provides for its tenants is sadly deficient compared with that of the average borough council. I could delay the House with many horror stories of GLC tenants living for three months without heating or hot water, or people who ask to have windows repaired and receive

calls not from glaziers but from electricians and plumbers.
If the transfers go through, I hope that we shall have a rather higher standard of maintenance of the transferred property. I hope, too, that if we are to protect the conditions of the transferred staff we shall not have the monstrosity of mobile caretakers inflicted on boroughs which accept the transfer. Most GLC tenants would say that a caretaker whizzing around in a van gives little protection and very poor service indeed. It is, I believe, the view of many that some of the vandalism problems on GLC estates are not helped by the caretaker getting into his van and disappearing at top speed whenever trouble crops up.
Finally, I turn to clause 9 and the question of powers to guarantee loans. Like other hon. Members who have spoken from the Opposition Benches, I support the principle enshrined in this clause. I accept what was said by the hon. Member for Ravensbourne (Mr. Hunt) that this would give help to small firms. In my borough we have had some of the worst large-scale industrial closures of any part of London. We lost 50,000 jobs over a period of 10 years. What we have been able to do in more recent years is to bring in a large number of small firms that have taken the place of at least some of the large companies that have gone out of existence. In our experience, many of these small firms need financial assistance, or at least financial backing. Many of the facilities available through organisations such as the NEB, Finance for Industry and the big banks are not what the small, one-man operation is looking for. Therefore, I believe that the guarantee powers proposed in clause 9 are very useful indeed.
I was sorry to hear the statement of the hon. Member for Hampstead (Mr. Finsberg). If he is not dizzy with his convolutions, I think that most of the rest of us are. He started by opposing the powers, then he supported the powers and now he is back again opposing the powers. [HON. MEMBERS: "Flexible".] Flexible, perhaps. "The india rubber man", some may say. My hon. Friend the Member for Bethnal Green and Bow talked about a conversion on the road to the Front Bench. One conversion we can understand, but two conversions seem somewhat excessive.
I am very sorry that the hon. Member for Hampstead has to adopt such a position. He may well argue that today's Budget creates a new climate and that the entrepreneur will now walk the land and private enterprise will rescue all these small firms and provide all the money for which they are looking. The GLC brief, which I find a very useful document, says that this clause is intended to benefit areas where there is a lack of investing confidence. That, I believe, is the nub of the problem.
Many of the areas we are talking about, such as dockland, are areas which the banks have turned up their noses at, the red lined areas and so on. I am very sorry that the Government have found it necessary to reject what I think is a useful initiative by the GLC.

Mr. Ronald W. Brown: May I draw my hon. Friend's attention to the fact that he and I were described as traitors by the Under-Secretary of State in the Evening News, because he said that we voted against that clause? How does my hon. Friend rate that in relation to the performance of the Under-Secretary of State?

Mr. Cartwright: I shall look forward to a confession from the Minister in the next edition of that London newspaper now that he has attained his exalted position.
Despite the disappointment which, no doubt, the GLC feels as a result of the Government's rejection of what I regard as a useful initiative, I very much hope that the GLC will stick to its guns on clause 9 and will try to fight it through. If it does, it can be assured of some very solid support from Labour Members.

9.36 p.m.

Mr. John Page: I apologise to you, Mr. Deputy Speaker, to my hon. Friend the Member for Streatham (Mr. Shelton) and to other hon. Members for not being in the Chamber when the debate began. The reason was that I was at a meeting of Greater London area Conservative trade unionists. It was a celebration of the election. There were so many of them, they were so enthusiastic and they had so much advice to give me to pass on to my right hon. and hon.

Friends that, unfortunately, I was delayed coming back to the House.
Speaking late is always a challenge, because the best points have already been made. Some of my points have been made by my hon. Friend the Member for Romford (Mr. Neubert). I hope it will not damage the hon. Member for Woolwich, East (Mr. Cartwright) if I say that I had intended to make one or two points that he made. Of course, that allows a greater amount of shorthand.
My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), by an act of parliamentary sleight of hand, was brilliantly able to introduce the question of flood control in the neighbourhood of that part of Middlesex. My hon. Friend the Member for Ealing, North (Mr. Greenway) is present, and he will remember that famous, horrible night in August 1977 when the Welsh Harp overflowed and the River Brent and River Pinn, which is usually a smallish culvert, became raging torrents. I was glad that my hon. Friend was able to raise this matter.
In my constituency, the Pinner Association has arranged a magnificent self-help system of voluntary flood warning officers. That is something that should be followed. However, I must tell my hon. Friend the Under-Secretary of State that I am disturbed to hear that background work on the flood prevention system is likely to be delayed by the GLC which rightly says that it cannot afford to take on new staff—until 1982. I know that many consulting engineers in London, probably extremely experienced, are not over-burdened with work at the moment.

Mr. Stuart Holland: They are probably unemployed.

Mr. Page: The hon. Gentleman talks about there being unemployed surveyors and architects. They will not be employed until 1982. But if the work were given immediately to consulting engineers, they could be employed tomorrow, as I hope they will. I hope to take this matter up with the GLC member for my constituency, who happens to be Mr. Horace Cutler. I hope that he will bring pressure to bear.
I shall be brief, because I want to sit down before 9.45. I support clause 3. It is rather a neat plan that offences for music, dancing, human posing, boxing,


wrestling and so on should be taken separately.
I turn quickly to clauses 5, 7 and 23. I raise one point connected with all three. Clause 5 talks about advertisement units and showcases, even those especially for the GLC, on pavements. Clause 7 deals with parking on footways. Clause 23 deals with tables and chairs and pavement cafes. The hon. Member for Woolwich, East mentioned something in relation to these clauses, and I should like to mention it more strongly. I sincerely hope that the advice of the National Institute for the Blind and other local blind organisations will be taken into serious consideration here. Twenty or 30 years ago, a blind person or a nearly blind person with a stick could get along pavements, but now there are so many cars parked on pavements and so many obstructions—regrettably, possibly even these new pavement cafes—which could all cause danger to such people.
I should like to mention in passing a growing nuisance in my constituency. Perhaps it applies to other constituencies. That is the increased amount of bicycling by young people on the pavements. Again, the hon. Member for Vauxhall (Mr. Holland) is tut-tutting in a rather nurse-maidish way. Does not he feel that the roads are probably the best place for bicycles to be ridden, so that elderly people, blind people and people with children in prams are not knocked about?

Mr. Stuart Holland: rose—

Mr. Page: I shall not give way to the hon. Gentleman, out of fairness to my hon. Friend who moved the Second Reading, but I promise to try to do so at a later date if the hon. Member wishes to interrupt me.
I revert to clause 23. I very much enjoy eating out in the open, provided that it is not in an area which is infected by Euproctis Chrysorrhea—the brown-tailed moth—whose caterpillars might well fall into one's Camparis. Where these pavement cafes are organised, it should be done, if possible, on a kind of permanent basis, so that blind people will know very easily where they are.
In considering the provisions relating to registration of hostels, under part IV, I hope that my hon. Friend will not make the restrictions too severe or too difficult

for cheap accommodation to be found in London for young visitors from home and abroad.
Here I must tell, very quickly, an anecdote in connection with a hostel, which concerned me about six weeks ago. I was rung up at five minutes to four on a Saturday afternoon—I was leaving at four o'clock—by a young relative of my wife, who said that she was outside a hostel and standing by a taxi and she did not have any money. She had got a cheque book, but no one seemed to want to cash a cheque for her. She asked what she ought to do. Then she got the taxi driver to speak to me. I said "How much?" He said that it was £16 on the meter because they had been out to London airport and back to try to cash a cheque.
I arranged for the driver to call at the House of Commons. I said that I would be delighted on the following Monday to give him a drink and some money. I asked him to ring me up in the evening to say how much it was. He rang me up in the evening and said "You owe me £27, because I gave her £5 for a night a the hostel and another £5 to spend."
That man happens to be a taxi driver and he is a member of the Samaritans. In view of some of the things that people say about London taxi drivers, that is a fine example of the fact that at least this good Samaritan turned up.
I must stop now. I would only remind my right hon. and hon. Friends on the Front Bench that over the years we have suggested a full day's debate on London every so often, at least annually, and not trying to hang our coats on the various pegs of general powers Bills. I hope that we shall have the support of my right hon. and hon. Friends for such regular debates.

9.44 p.m.

Mr. Frank Dobson: Unlike the happy wanderers on the other side of the Chamber, I shall confine my remarks entirely to clause 4—and I hope that no one will object to that statement. I am concerned about the proposal to pay a salary instead of allowances to the new chairman of the London Transport passengers' committee. A number of questions need to be answered: why is that salary needed, what level of salary is likely to


be proposed, how will it be paid and will the public get value for money?
To date the chairman of the London Transport passengers' committee has got by on allowances and expenses, and I do not understand why it is necessary for the new chairman to receive a salary. The GLC councillors put themselves to the trouble of going to the electorate for approval, but when they attend meetings at County Hall they only get allowances. From what we have heard tonight, it is clear that those councillors who are not idle attend considerably more meetings and do more work than the chairman of the London Transport passengers' committee. I therefore question the introduction of a salary for him.
One reason for increasing pay is to attract people to a job. The reports of London Transport indicate that it is difficult to recruit bus drivers, tube drivers and such people to provide services. London Transport is jibbing at paying those people enough money, but the GLC is paying to encourage someone to be chairman of the committee.
We have an unhappy example of GLC payments to senior people at London Transport. I remind the House of the peculiar arrangement whereby the GLC agreed to pay the present deputy chairman of the GLC—not by sending him a cheque on which he pays tax—and I quote from its report that authorised the payment:
By a special arrangement with Dumon Stansby &amp; Co. Ltd., the services of Mr. J. Stansby as deputy chairman have been contracted for a period not exceeding 3 years, subject to a payment to the company of £22,500 a year".
I should like to be assured that the GLC will not come to any arrangement over the payment to the chairman of the London Transport passengers' committee other than payment directly to him.
Above all, people elected to this House should be concerned to see that the public are getting value for money. The GLC informed me that last year the London Transport passengers' committee cost about £23,000 and the hon. Member for Streatham (Mr. Shelton) has told us that it dealt with 237 complaints. My mental arithmetic is pretty bad, but that is about £100 a complaint. Its annual report

for last year shows only about 70 complaints, and that works out at considerably more than £300 a complaint. I am not sure that we are getting value for money.
We have been told that if the chairman gets a salary it may add to the status of the committee. It certainly needs to, because although the committee reports to the GLC and not to London Transport, last year its report was so significant in the eyes of those in control of County Hall that they did not even bother to discuss it at the meeting of the Council. That is a reflection on them and the status of the committee.
I have galloped through my speech to enable the hon. Member for Streatham to reply. I shall not go into the highways and byways raised by the Under-Secretary of State, but he says that people in London are perfectly happy with the GLC. In the immortal words of the Duke of Wellington:
If you believe that, you will believe anything.
The GLC has rightly been described as the slowest bureaucracy this side of the Kremlin, and the sooner it is abolished the better.

9.50 p.m.

Mr. William Shelton: With the leave of the House, Mr. Deputy Speaker, I shall take the few remaining minutes to answer the questions that have been put. I appreciate the helpful manner in which the Bill has been treated by hon. Members, and I also express my personal thanks for the kind words that have been said about me.
I begin by telling the Minister that the Erith Tramways and Improvement Act 1903 was a distinguished Act to improve the tramways in Erith.
The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) referred to clause 4 and asked why the chairman should have a salary. The principal reason is that it was recommended by the previous Government that he should. It seems the sensible thing to do, and I suspect that his salary will be less than his present remuneration. The chairman of the transport users consultative committee draws £1,000 a year, and this may be some guide to the amount that this chairman will receive.
Clause 7 deals with parking. I agree that the present situation is not particularly satisfactory as the powers of the GLC are not in force, principally because of the request made to the Minister of Transport in 1975. The London boroughs felt that implementation could not be achieved. In other words, there was not sufficient money to make sure that cars did not park on pavements and verges. Therefore, it is not illegal to park in such places at present. I understand the difficulties of the London boroughs because of the cost involved. However, the Under-Secretary has given us the assurance that the Road Traffic Act 1974 will come into force in October 1980. I agree that that is too long to wait, but I understand that it is a matter of cost.
Clause 8 has been the subject of most discussion this evening. It is simply a piece of machinery to ease the transfer of houses. It is nothing to do with the fact of the transfer of houses, which no doubt will be debated extensively by the House when the order is laid. In this Bill we are merely talking about a way of helping the staff in the transfer. The Minister has given the date of transfer as being 1 January.
The hon. Member for Hackney, South and Shoreditch (Mr. Brown) asked whether there was any trade union support. I understand that the GLC staff committee supports the principle of setting up a staff commission, as does NALGO. I was also asked whether the tenants had been consulted. Certainly they have been consulted in Camden, where a survey was undertaken. Perhaps rather to the dismay of the local authorities in Camden it was found that there was general support for the principle of transferring to the boroughs.
Hon. Members talked about the importance of mobility in housing. I agree entirely and believe that the House recognises the importance of this. I should be very unhappy if I thought that the transfer of estates from the GLC to the boroughs would diminish mobility. We must make sure that this is increased, and, in my view, the sale of council houses will increase rather than diminish mobility. People will have an asset which they can sell when they wish to move rather than a refuge from which they have to venture with little chance

of achieving a similar refuge, as is now the case with council housing. From the point of view of mobility, I can see only advantage in the sale of council houses, but if the transfer of houses to boroughs decreases mobility we must ensure that that trend is reversed.
It was asked why the New Towns Commission should not merely replace the staff commission mentioned in clause 8. The answer is that it is not improbable that certain members of the New Towns Commission might find themselves on the staff commission. Certain discussion has taken place about the transfer in general. It appears that so far only seven London boroughs have categorically refused to accept the transfer.
Clause 9 also resulted in a certain amount of discussion, the ardour of which has been somewhat dampened by the remarks of my hon. Friend the Minister. No doubt there will be considerable discussion of these matters at later stages of the Bill's progress.
The hon. Member for Hackney, South and Shoreditch talked of conversions on the road to Damascus. It must have been a fairly crowded road, and I welcome the hon. Gentleman to it, because I well recall that last year, as he has already confessed, he cast his vote against these proposals.
I was asked why there was no definition of industrial and commercial buildings. The short answer is that, rightly or wrongly, the same phraseology is used in this Bill as was used in the Inner Urban Areas Act 1978.
The hon. Member for Greenwich (Mr. Barnett) asked whether there would be financial limits to the guarantees. The answer is in the negative. He also asked whether there could be Government sanctions and controls. The answer again is in the negative, but this matter can also be discussed at later stages. Certainly such steps are not foreseen at present.
Questions were asked about the sums involved. In general, we are talking of small businesses, and therefore the amounts may not be very great. If this Bill is enacted, an exception might be made on the lines of the Trammel Crow trade mark case in Southwark, which was discussed last year.
In regard to part IV of the Bill dealing with hostels, my hon. Friend the


Member for Romford (Mr. Neubert) thought it was a pity that these provisions were not brought forward earlier. I agree that it is a pity, because I understand that one of the major problems is that in certain parts of London hostels have been taken over by undesirable persons who go to such hostels with the plea "I shall give you £500 for this hostel for the month of August". For that month that group will take control of the hostel and exploit it in every possible way. Such a group may tend to overcrowd the hostel and deny those in the hostel their rights and privileges. Because of housing pressures, such a group may get away with it. This is one of the principal reasons why registration is important.
It has been said several times that this is a modest Bill, and I welcome that fact.

I deprecate the thought that we should ever have legislation for its own sake. I trust that we shall be able to cope with the withdrawal symptoms of less legislation as we move along our path. I am grateful to the House for its kind words, and I commend the Bill.

Question put and agreed to.

Bill accordingly read a Second time and committed.

BUSINESS OF THE HOUSE

Ordered,
That the Motions relating to the Committee of Selection may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Brooke.]

COMMITTEE OF SELECTION

Order read for resuming adjourned debate on Question [11 June],
That Mr. Ronald W. Brown, Mr. Walter Clegg, Mr. A. P. Costain, Mr. Ifor Davies, Mr. Paul Dean, Mr. James Hamilton, Mr. Philip Holland, Mr. Harry Lamborn and Mr. Kenneth Lewis be members of the Committee of Selection.—[Mr. Cope.]

Question again proposed.

10.1 p.m.

Mr. Deputy Speaker (Mr. Bernard Weatherill): Before we start the debate on the motion, I should inform the House that Mr. Speaker has selected the amendment standing in the name of the hon. Member for Antrim, South (Mr. Molyneaux).
I should also inform the House that Mr. Speaker has given careful consideration to the motion for an instruction in the name of the hon. Member for Nottingham, West (Mr. English) in which the hon. Gentleman proposes to give important new duties to the Committee of Selection. The powers and duties of the Committee are conferred upon it by the Standing Orders of the House. To alter those powers in the way that the hon. Gentleman proposes would require amendment of Standing Orders or a new Standing Order. The hon. Gentleman's motion does not do that. Therefore, in the view of Mr. Speaker, it is out of order and cannot be called. If the hon. Gentleman wishes to oppose the nomination of Members to the Committee of Selection on the ground that it is inappropriate until the powers of the Committee have been reviewed, he is entitled to do so.

10.2 p.m.

Mr. Michael English: I accept Mr. Speaker's ruling, Mr. Deputy Speaker. Therefore, I object to the motion. The reasons for my objection can be explained, at the risk of boring you, Mr. Deputy Speaker, by some brief words on the functions of the Committee of Selection.
Several Members have recently asked me for an explanation of what the Committee of Selection does. For all practical purposes the Committee appoints the members of Standing Committees and of Private Bill Committees. However, it

is no secret to you, Mr. Deputy Speaker, that in practice the Whips of all parties propose the members of Standing Committees, the ad hoc committees to consider particular Bills. Private Bill Committees, the ad hoc Committees to conusual sort. They consist of four Members, usually two from each side of the House.
In its forty-sixth recommendation the Procedure Committee proposed that the nominations for Select Committees should go through the Committee of Selection. The idea was to protect Members of Parliament from being under the complete domination of the Whips on both sides.
An illustration of what the Committee of Selection has done in the past is that on one occasion a Chief Whip proposed that a vested interest that he had a connection with should have two members on a Standing Committee. The then Chairman of the Committee of Selection, Mr. Hugh Delargy, ensured that the vested interest opposed to that of the Chief Whip should also have two members—quite different from the original proposal. On another occasion it was suggested by one individual that Members should be knocked oil a Select Committee not because of anything that they had done on the Select Committee but in connection with another matter on the Floor of the House. [Interruption.] In spite of the approbation to the contrary of the Deputy Chief Whip on my side of the House—he has a certain vested interest in these matters—Back-Eench Members need some protection from the hierarchy of the Whips' offices on both sides of the House.
Therefore, the Procedure Committee proposed that these nominations should go through the Committee of Selection as a sort of check. It did not propose to deprive the House of its ultimate right to appoint the members of Select Committees. I shall not go into the details. Hon. Members can find them if they wish on page lxxiv of the Procedure Committee's report, paragraphs 6.18 to 6.21.
It is therefore important that before we make this appointment tonight, since the next motion in the name of the Government Deputy Chief Whip proposes that we should appoint the members for the whole of the Parliament, the Leader of the House should tell us his desires about the Procedure Committee's recommendation. If we had had the debate that he


has promised us on the Procedure Committee's report, this issue might never have arisen. That debate will arise some time before the Summer Recess, however, as the Leader of the House and the Prime Minister have told us. Until we have had that debate, the House will have had no opportunity to consider any recommendation of the Procedure Committee.
In all, 265 hon. Members wish to have that debate and wish the House to have an opportunity of deciding on the main issue of setting up departmentally related Select Committees. I accept that the method of appointing that or any other Select Committee is a somewhat subsidiary issue. We want to know whether, if the House should decide to accept the main recommendations of the Procedure Committee and to set up departmentally related Select Committees, the right hon. Gentleman will allow the House some opportunity to reconsider the powers of the Committee of Selection.
Like most hon. Members, I have no objection to the names that are put before us tonight. It may be that the hon. Member for Carlton (Mr. Holland), for example, who is a near neighbour of mine in constituency terms, will happen to become chairman. I would think only that Nottinghamshire would appreciate that fact. He is probably an ideal man for that job. However, we would want him to have greater powers in that capacity than he would have under the present arrangements. One would wish him to have the existing powers of that position over Standing Committees and those Select Committees that deal with Private Bills, and in addition to have the powers recommended by the Procedure Committee over all other Select Committees.
May we have an assurance from the Leader of the House that, if the House were to decide the main issue in favour of the Procedure Committee's recommendations or something like them, we should have an opportunity at some stage to propose, as Mr. Speaker's ruling implied, a change in Standing Orders to permit us to consider the secondary issues raised by the Procedure Committee? If we could, I do not think that the right hon. Gentleman would

encounter any difficulty with this motion. However, we want to know where we are going before we take the final step of appointing the Committee for the whole of the Parliament.

10.9 p.m.

Mr. J. W. Rooker: I wish to raise a slightly different point from that of my hon. Friend the Member for Nottingham, West (Mr. English). I am not sure whether all the nine hon. Members named in the motion are now in the Chamber, but before I agree to the motion I want to know from each of them here in the Chamber, so that what they say is on record, that they will do their job according to Standing Orders on behalf of the House and not on behalf of the two Front Benches.
In the last Parliament the Committee of Selection did not do its job. It kept from Standing Committees hon. Members on both sides of the House who had a justifiable right to serve on them. Representations were made and just swept away. As hon. Members know, when the membership of Standing Committees is put before the House by the Committee of Selection, there is no possibility whatever, under our present procedures, of objecting in the way that is possible on a Select Committee appointment. We must like it or lump it. It is in the Standing Order. There is nothing we can do about it.
I wish to give two examples which highlight the problems that hon. Members on the Back Benches come up against. Let new hon. Members on the Tory Benches who in a year or two, if things have not changed, wonder why they have not been on a Standing Committee reflect on this debate tonight.
In 1977 the hon. Member for Wolverhampton, South-West (Mr. Budgen) served on the Finance Bill Committee. He made speeches on that Committee that members of his own party did not like. He told the truth on many occasions. I agreed with some of the speeches he made and opposed others. Nevertheless, he went into that Standing Committee and spoke the truth as he saw it. I used to watch the winces on the faces of the Front Bench leadership on that Finance Bill at what was coming from the Back Benches. That was in 1977. In 1978, of course, the


hon. Member for Wolverhampton, South-West was not on the Finance Bill Committee, and there was nothing that he could do about it.
Last year the Labour Administration brought in the Social Security Bill. The chairman of the Labour Back Bench social security group, the then Member for Coventry, South-West, Audrey Wise, was excluded from membership of that Committee. We checked back on the times that that had happened in the past to Members on both sides of the House. We checked where the chairman of a subject group relating to the work of a Department had been kept off what was a miscellaneous provisions Bill for that Department, though with every right to serve on the Standing Committee.
No measure of representation behind closed doors in this place was enough. I went along with my colleagues. The Chief Whip and the other bosses of this place listened to us. Those Members with the right honourable titles and the Chairman of Selection were there as well. The Chairman said "I only did what I was told to do". All that the Committee members were doing in the last Parliament was receiving two or three lists of names and rubber-stamping them. They were in and out of the room in 10 minutes when the Committee of Selection met—or less than that, I am told.
It is not good enough, when we appoint, as we are doing tonight, hon. Members to work on behalf of the House of Commons—not on behalf of the Government Front Bench or on behalf of the Opposition Front Bench but on behalf of all of us on the Back Benches as well—that when a Bill gets a Second Reading, in a few days, or in some cases a few hours later, the Chairman of the Committee of Selection is given a couple of bits of paper, told to convene a quick meeting upstairs and—bingo—out comes the Standing Committee.

Mr. Bob Cryer: I know that my hon. Friend is too modest to point this out, but there was another occasion when the Committee of Selection seemed to take a positive pleasure in debarring my hon. Friend and the then hon. Member for Coventry, South-West, Audrey Wise, from the Finance Bill Committee. There were many Labour Back Benchers who were very keen to see them on that

Committee in view of the very reasonable improvements which they made to a previous Labour Finance Bill.

Mr. Rooker: I hope that that intervention by my hon. Friend will not be lost on whoever will be the Chairman of the Committee of Selection and that he will not use his rubber stamp. We shall have a Finance Bill within a couple of weeks at the very outside, unless all the Finance Bill is taken on the Floor of the House. If that happens, I tell Conservative Members that they will have no Summer Recess; that is for sure.
The point is an important one, Mr. Deputy Speaker, and I should like each of these hon. Members to stand up and say to this House that he will not be bound by lists that are given to him and that he will not be used as a rubber stamp. I should like each one to say that he will do the job laid down in the Standing Orders. Otherwise it is a farce. The Committee of Selection is the key to all other Standing Committees. It will be no good any hon. Member complaining in future about the composition of Standing Committees. This is the time, here tonight, when we have to take action. All that we can do is either not appoint the whole Committee or take the word of hon. Members that they will not be used as rubber stamps. I ask each of these hon. Members to give this undertaking before the debate is over. If they will not, I shall have to divide the House on the whole issue of setting up a Select Committee in the first place.

10.15 p.m.

Mr. Robin Maxwell-Hyslop: I believe that there is a point of principle to be made here, but I cannot join the hon. Member for Birmingham, Perry Barr (Mr. Rooker) in his censure of what he regards as a lack of integrity among those of his parliamentary colleagues who serve on the Committee of Selection. I do not believe that to be true or fair. But the point of principle is whether nomination to Select Committees should be made by the Government and the official Opposition or by a Committee of Selection which has the confidence of its colleagues in the House of Commons. I believe the latter to be the right principle for the proper service of the House.
We have not yet had an opportunity to debate the recommendations—more


than 70 of them—of the Procedure Committee. Many of the most important of those recommendations concern a restructuring of our Select Committee system, which we debated in the last Parliament but on a motion which was not executive. In my modest contribution to that debate, I endeavoured to point out that whatever we did about changing the structure of our Select Committees would nevertheless be ineffective unless the House took unto itself the task of choosing which of its Members it wished to serve on those Select Committees.
Do what we will to our Select Committee system, it cannot command the full confidence of the House which our Select Committees are charged to serve unless their composition also, is within the control of a Committee which is not itself a puppet body.
I disagree profoundly with the hon. Member for Perry Barr in his belief that the Committee of Selection is a puppet Committee. I do not believe that it is. It has a most difficult task in manning the Committees of the House. There are colleagues who wish to serve on a Committee but cannot. There are probably far more who are put on Committees when they would rather occupy their time in other ways.
The Committee of Selection, on which I have never served, has a most unenviable task, but I personally have confidence in its integrity, and I believe that its integrity is such that it deserves from the House the duty of recommending to the House those who should serve on Select Committees whether or not the structure of our Select Committee system is altered on the lines recommended in the last Parliament.
This is a question of principle, and if the feeling in the House is, as I hope it will be, that our Select Committee system is to be not a new way of wasting the time of busy Members but a continuation of the process of bringing back to the House of Commons the accountability of the Civil Service in particular, I think that it is a necessary condition, though not a sufficient condition, for the discharge of their function that the task of recommending to the House of Commons the composition of Select Committees, within the normal guidance which the House

gives to that Committee about the comparative strength in all parts of the House, should be entrusted to the Committee of Selection.

Mr. Rooker: What is the position when a Minister in Whitehall, in receipt of advice from civil servants, draws a list of those whom he does not want on the Committee and sends it across to his Whips' office with the message "These are the ones I don't want on the Committee of Selection"? That is the Executive controlling the function of this place. I know that that happened in the previous Parliament. I like to think that it will not happen during this Parliament, even under a Conservative Administration. All I want the nine hon. Members to do is to say that they will have no truck with the approach that I have described if it takes place.

Mr. Maxwell-Hyslop: I have been in the House rather longer than the hon. Gentleman. I have been in this place for nearly 20 years. It is my experience that hon. Members who are put in decisive positions on the recommendation of the usual channels in the hope that they will be confined have their personal integrity still intact and have very often disappointed those who appointed them.
There is no foolproof system except the personal integrity of every hon. Member. We all know that to be true, independent of party. If we cannot repose our confidence in the Committee of Selection, we cannot repose it anywhere.

Mr. Christopher Brocklebank-Fowler: Will my hon. Friend give comfort to those of us who would like to believe what he says but who wonder why only three or four of the nine hon. Members it is proposed should form the Committee are present in the Chamber while we discuss this important issue?

Mr. Maxwell-Hyslop: I have no means of answering my hon. Friend's question, except that I totally reject the suggestion made by the hon. Member for Perry Barr—I do not doubt that it was made with the best of intentions—that his colleagues should have to pledge themselves to behave honourably. I should expect my colleagues to do that without making such a pledge. The idea that our colleagues who are being proposed


to be entrusted with this unpleasant task, which is primarily one of collecting brickbats rather than accolades, should be present tonight to recommend themselves does not recommend itself to me.

Mr. Brocklebank-Fowler: rose—

Mr. Maxwell-Hyslop: I shall give way shortly. I should not wish it to be the custom in the House that when there is a motion to appoint hon. Members to any Committee those hon. Members should be under an obligation to be present in the Chamber to defend their selection.

Mr. Brocklebank-Fowler: My hon Friend may have put an incorrect interpretation on my question to him. It is not my argument that hon. Members should be present to defend or advocate their own membership of the Committee of Selection. I was suggesting that they should be present at least to listen to the arguments about the Committee to which they hope to be appointed.

Mr. Maxwell-Hyslop: I can think of few weaker arguments than that. The principal reason for being present in the Chamber is to contribute to debate. There are certain circumstances in which it is generally felt that colleagues should not contribute to a certain debate. Surely colleagues should not try to catch Mr. Deputy Speaker's eye to justify their nomination to the Committee of Selection, which is an especially important Committee. I am rather sad that the question of principle, which is whether the Committee of Selection or the usual channels should exercise this crucial function—

Mr. Rooker: It is the same thing.

Mr. Maxwell-Hyslop: It is not the same. The water should not be muddied by allegations, none of them specific, against any hon. Member that members of that Committee are corrupt. The hon. Member for Perry Barr has been in this House long enough to know that if he wishes to allege that colleagues are corrupt he should name them so that they may defend themselves against the accusation.

Mr. English: The hon. Gentleman is allowing himself to be deflected from the issue of principle. I mentioned two specific

occasions when a former Committee of Selection had defended the rights of individual Back Benchers against the usual channels.

Mr. Maxwell-Hyslop: There are many other cases of which some of us may know. Many of our colleagues perform their duties in circumstances of moral courage, unknown to their colleagues, because they do not declare them.
I do not think that the House will do itself a great service tonight if it abdicates the task before it of deciding which of two alternative courses it should take—whether the recommendation for membership of Select Committees should be made through the usual channels or by the Committee of Selection—by going into unprovable, extraneous and not very laudable arguments of ad hominem type but without specifying the Members against whom allegations are made. Let us focus on the crucial point of principle—that is, the clear decision which the House must take. The balance of advantage lies in favour of the Committee of Selection being entrusted with this most important duty.

Mr. James Molyneaux: I beg to move, as an amendment to the Question, to leave out "Mr. James Hamilton" and insert "Mr. A. J. Beith"
I shall resist the temptation to become embroiled in the difference of opinion between the hon. Member for Tiverton (Mr. Maxwell-Hyslop) and his colleague the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler), who seemed to be arguing on an admirable basis that is common to a great many institutions, namely, that Members are eligible for election only if they are present or have tendered an apology. I shall not go deeper into that question tonight.
We tabled this amendment because we and the other minority parties that we represent simply cannot understand why we should be deprived of a place on the Committee of Selection for the whole of the present Parliament. We could have understood the decision, and therefore have been much more sympathetic, had the Government acted in accordance with the report of the Select Committee on Procedure. However, the opposite is the case. The Government are acting


contrary to a recommendation of the Select Committee on Procedure.
Secondly, we could have understood the change in the previous structure if over the years it had proved to be unworkable. But here again the reverse is the case. I was one of those most closely involved in the various consultations. I cannot recall a single occasion on which the mechanism broke down.
I invite the few members of the former Committee of Selection who are present to point to any meeting at which their deliberations were hindered or obstructed by lack of co-operation on the part of the minority parties. Those parties always succeeded in reaching agreement on the spokesman to be nominated to any particular Committee. What is more, when we had managed to make such an appointment, it was invariably found that we had appointed someone who was the appropriate spokesman for the minoritly parties, and, even more important, had some knowledge of the subject under discussion.
The hon. Member for Tiverton mentioned two categories. He said that there were those who wanted to be on and those who were pushed on. I would add a third category—those who were quite useless once they were pushed on to a Committee.
It appears now, Mr. Deputy Speaker, that if the present motion were to be carried unamended, we would revert to something like the pinned-on-a-list system which totally failed us in the past. Unless the Government display some willingness to listen to reason and display much more flexibility—and the kind of co-operation which the Government and the Opposition Front Bench received from the minority parties in the last Parliament—I shall advise my right hon. and hon. Friends and colleagues to divide the House.

10.32 p.m.

Mr. Charles Fletcher-Cooke: This is a most interesting debate.
When I first entered this House, nobody wished to serve on the Committee of Selection at any price. Nobody, 300 years ago, wished to serve in this House. People had to be shanghaied into this House. Twenty years ago people had to be drafted on to this Committee. But

now, of course—and quite rightly, as the hon. Member for Birmingham, Perry Barr (Mr. Rooker) has pointed out very eloquently—the nuances of different shades of opinion in this House have become extremely important, and the selection of the selectors has become almost like the question of who sits in the House of Lords on an appeal. One of the reasons why in the Supreme Court of the United States all nine judges have to sit is that, if one were to sit in a division there, one could get one's verdict by reason of the judges one selected
This is a very important matter, therefore, and the hon. Member for Perry Barr has made a very important case. But this is quite a modern development, and it is a good one, in my view. In the old days it was very rough justice between the two sides of the House of Commons. Those who had the majority put on their stooges and those who were in the minority put on their stooges, and it worked. It worked quickly, efficiently and cleanly, and nobody disagreed. But now we have got into a sophisticated area in which that does not work at all.
The selection of the selectors is very important indeed. Although I think we ought to pass this motion tonight—because the House has to have its work continued—we ought to look into this matter for the future, because the various shades of opinion are very important, and the system is much more democratic than the old system.
Those who have objected to the motion have a case. At the same time, I think that they are a bit premature. There are, as the Chancellor of the Duchy of Lancaster would agree, about 76 proposals of the Committee of the hon. Member for Nottingham, West (Mr. English). I always think of him as the author of these matters. I may be doing him an injustice, or even too much justice—I am not quite sure which—but nevertheless this matter must be looked into. Tonight we must get on with the job.

Mr. English: I must point out to the hon. and learned Gentleman that the report was originally drafted, as most reports are, in the name of the Chairman by Officers of the House. Almost every clause was discussed by all the members of the Committee. While we were unanimous on certain recommendations,


no one member of the Committee could conceivably claim to be responsible for the Procedure's Committee's report.

Mr. Fletcher-Cooke: The hon. Gentleman is modest, as always. Nevertheless, his name is rightly linked with these proposals. They will be looked into.
The hon. Member for Perry Barr put forward a very good argument on the selectors. All I suggest to him is that, at 20 minutes to 11 tonight, before the 76 proposals of the Committee of the hon. Member for Nottingham, West, or whoever's Committee it is, are discussed, we cannot—

Mr. English: My hon. and learned Friend the Member for Warrington (Sir T. Williams).

Mr. Fletcher-Cooke: I am obliged to the hon. Gentleman.
We cannot tonight hold up the whole procedure of the House, because the selectors of the selectors are the foundation and groundwork of our procedures. Let us get on with it tonight, but let us accept the view that we can no longer go on with the rough and ready, black and white, Whips from both sides—

Sir Bernard Braine: Hits and misses.

Mr. Fletcher-Cooke: Hits and misses, as my hon. Friend the Member for Essex, South-East (Sir B. Braine) puts it. Let us get on with it tonight, but take seriously what the hon. Member for Perry Barr has said. The question of the selection of the judges is crucial to the life of the House and of democracy.

10.36 p.m.

Mr. Donald Stewart: I do not think that the House should accept the advice proffered by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). If the motion is passed, the Committee will be in effect for about a year.

Mr. Cryer: Five years—the life of a Parliament.

Mr. Stewart: There are two issues here. There is the question raised by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), with which I shall not deal at the moment, but that does not

mean that he has not put forward a good argument.
I wish to support the submission made by the hon. Member for Antrim, South (Mr. Molyneaux). I understand that the reason for the exclusion of a representative of the minority parties is that the formula precludes such a representative on the ground of insufficient numbers in the House. In the last Parliament the mathematics did not work out at all, but, for all that, we were represented on the Committee. I served on the Committee for a year. It worked very well. Therefore, I see no reason for exclusion on this occasion.
The country has just gone through an election which has raised grave doubts about fair representation. I do not think that we should add to any questions raised by jerrymandering of this kind. It will mean that the voters represented in the House by the Liberal Party, the Ulster Unionist Party and the Scottish National Party will have no say on the Committee of Selection. The matter can be resolved by good will and fair practice on both sides. I ask the Leader of the House to pay attention to the argument for inclusion on the Committee of a representative of the minority parties in the House.

10.39 p.m.

Mr. A. J. Beith: I wish to contribute briefly to the debate because it is important to look at the circumstances in which the practice of representing the minority parties on the Committee of Selection arose. It led to the appointment of the right hon. Member for the Western Isles (Mr. Stewart) as the first of a number of us who have done the job by rota. It arose during the last Parliament when, as members of minority parties, we found increasingly that our views on membership of individual Committees were not being respected, not out of any lack of good will on the part of the members of the Committee of Selection but because of the practical difficulties of relying upon a member of another party to assess the relative claims of members of a group of parties with whom his links were limited.
The hon. Member for Carlton (Mr. Holland)—I see that he is nodding—manfully sought to carry out this task. I would not wish it upon him when combined with the greater responsibilities


which he might yet enjoy on this Committee if the main motion is carried tonight.
It was obviously a more sensible arrangement to have someone who could speak for the minority parties, and who would not only do that but engage in consultations week by week with the other parties to reach some agreement on who would claim places on particular Committees. That we were able to do with considerable success. However, we were not able to do so until we first crossed the barrier of getting representation on the Committee.
We had many consultations and many arguments, and many letters went to and fro. We advanced a case based upon numbers. We advanced the case that we ought to have a place on the Committee because of the size of our representation in the House and the numbers we had outside the House, the votes that were cast.
However, the Committee of Selection did not accept the case based upon numbers. It took a quite different view. The Committee, under the chairmanship of the right hon. Member for Sunderland, North (Mr. Willey), made a special report on the subject, in the 1975–76 Session, in which it said:
In nominating Members to serve on Standing Committees Your Committee is well aware of the difficulties arising from the present composition of the House, especially in regard to the Members of the Minority Parties: that is to say the Liberal Party, the Scottish Nationalist Party, the United Ulster Unionist Coalition, and Plaid Cymru.
Your Committee has given careful consideration to the proposal that one of the members of Your Committee should be drawn from the Minority Parties.
The Committee went on to argue that these minority parties
cannot claim, even collectively, to qualify for a place on Your Committee
on the grounds of number. The report continued:
Nevertheless, having regard to the nature of Your Committee's work and the need for acceptance by the whole House of decisions of Your Committee, Your Committee proposes the inclusion of one member from the Minority Parties.
The Committee made a positive recommendation, which was then implemented. In order for it to be implemented, the consent of the then Opposition party was

necessary, because it was in effect one of that party's places, an Opposition place, which was given up for the purpose.
The whole argument tonight is about whether the present Opposition are prepared to surrender one of their places for the same purpose. The unwillingness in this respect is strange indeed. I look to the right hon. Member for Lanarkshire, North (Mr. Smith) to speak to it in due course. I think that the speech that we ought to hear tonight is really one from the right hon. Member for Wakefield (Mr. Harrison), who is the person who made this decision. We have all been waiting for many years for a speech from the right hon. Gentleman. On this issue he could contribute manfully, because I am quite sure that it is he who lies beind it.
But once the Committee had made that special report, the House, with the co-operation of the then Opposition and, indeed, the Government, who consented to this arrangement, went on to implement it. The right hon. Member for Western Isles took his place on that Committee. Some time later, by agreement between the parties concerned, I succeeded.
The arrangement worked well as an arrangement between the minority parties. We were able to arrive at agreement on who should serve on the Committees, and that saved a great deal of difficulty, because otherwise the Committee of Selection itself has to decide whether to put an SNP Member, an Ulster Unionist Member or a Liberal Member on a Committee considering a United Kingdom Bill, or whether—and this is often the more difficult question—to put a Liberal Member or an SNP Member on a Committee considering a Scottish Bill where each party has representation and votes in that country.
We resolved these difficulties and saved the Committee a great deal of work. It worked well within the Committee itself. I know that the right hon. Member for Sunderland, North, the then Chairman, and, I am confident, the then Opposition leader on the Committee, the hon. Member for Carlton, both found that it eased their responsibilities and enabled the Committee's work to proceed smoothly—so smoothly, indeed, that I cannot recall in all my time on the Committee a meeting of the Committee of Selection ever lasting longer than seven minutes. I can


recall at least one occasion when the Committee made five decisions in the course of one minute and brought its proceedings to a conclusion.
There was a great deal in what was said by the hon. Member for Perry Barr, because at least the minority parties were able to assist the Committee's work and ensure that it did not have to spend its time making assessments of which minority party should serve on a particular Committee.
The minority parties, which are seeking a continuance of a practical and effective working arrangement, represent substantial bodies of opinion in the country, and they represent groups whose position in the House ought to be considered. The idea that qualification for a place on this Committee can be decided only on a numerical basis was rejected by the Committee and the House in the last Parliament. We have no need to advance the case on that ground, but we advance it because it is a practical and sensible working arrangement. There is no good reason why the present Opposition should seek to overturn it, and I seek the support of all hon. Members in continuing something that has been practical and useful.

10.45 p.m.

Mr. Clement Freud: I speak to the amendment in the names of the right hon. Member for Western Isles (Mr. Stewart), the hon. Member for Antrim, South (Mr. Molyneaux), and my hon. Friend the Member for Rochdale (Mr. Smith).
On a number of occasions in this House we have had words about the Committee of Selection, most notably in May 1976 when the Government lost yet another by-election and the number of Members on both sides of the House was pretty even. The current dispute is different. It is occasioned by what can only be called the churlishness of the Opposition Whips. The amendment quite simply is not a personal one. No one would like to say anything unpleasant about the man who, we hope, is to be replaced by my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith). It is simply a question of allowing a minority party to have a say.
Business in the House has always been transacted with a mixture of expedience

and precedence. I draw the attention of the House to the establishment of the Committee of Selection in 1839. In that year Lord Melbourne was the Prime Minister. The Members were fairly volatile in their party allegiance, but the original Committee of Selection had on it five Members. They were Mr. Estcourt, who was an independent Liberal university member, and he was joined by two Liberals and two Conservatives. It seemed absolutely right to have that sort of composition. There were no minor parties in Parliament at that time, unless one called them all minor parties.
The idea of the Committee of Selection at that time was to include people who had either a pecuniary or a geographic interest in the matter to be transacted by the Committee. I quote from the Procedure of the House of Commons, Vol. II, 1908:
The Committee of Selection, to which reference has already been made in several places. This committee consists of the chairman of the Standing Orders Committee, who is ex-officio chairman, and ten other members: three are a quorum. The work of the committee is continuous organisation.
It has always been the idea of a Committee of Selection to represent people who best know the quality of those Members who are due to serve on it. For that reason it is important to have a representative of the minor parties.
The 1976 dispute ended in the sad death of Mr. Hugh Delargy, but on 3 May 1976 he said about the Members:
They are independent parties with their own Leaders, their own Whips and, more important, their own policies. They are the Liberals, the Scottish National Party, the United Ulster Unionist coalition and Plaid Cymru There is also the SDLP of Northern Ireland. None of these parties was elected to support the Conservative Party in this House. They were not elected primarily to oppose the Labour Party. They were elected for positive reasons—to pursue certain policies and to serve their electorates.
Combining those parties as though they were one united group is wrong. Uniting them with the Conservative Party is doubly wrong. Lumping those parties together and saying they are a united Opposition is simply a wild and crashing confusion of thought.—[Official Report, 3 May 1976; Vol. 910, c. 984.]
In that debate the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said something which I shall read because it is important and well put. He said:
Before the Committee of Selection proceeds to that task, it seems to me right that the Committee should be representative itself of this


House. At the moment, five of its members are supporters of the Government and only three represent the Opposition parties. Indeed, there are no members of the Committee who represent the four minor parties which sit on this side of the House. That seems to me to represent a totally undemocratic situation and one which should not be allowed to proceed.
The Committee does not report to the House and have its policy approved by a motion, and the House does not have the opportunity to approve the general principles upon which the Committee will be proceeding. That means the Committee could proceed to nominate Standing Committee representation which could be totally unrepresentative of the House. It is for that reason that it seems to me all the more important that the Committee itself should at least carry parity of membership from both sides of the House before it deliberates on its policy."—[Official Report, 28 April 1976; Vol. 910, c. 389–90.]
When I was fortunate enough to draw the No. 1 position for Private Members' Bills, I was faced with the selection of Members for the Committee. It is the tradition of the House that if there is no Division on Second Reading, he who moves the Second Reading may nominate the Members of the Committee. Having given two Members each to lead for the two major parties, I suddenly faced problems because the Government Whip decided that he would like a third person. It is essential that all Members of Parliament have someone on the Committee of Selection to whom they can plead their case. Had I not been fortunate enough to have my party's Whip serving on the Committee at that time, I would have lost one supporter. When there is no Division, it is right that the rule of the House should be continued in this way.
I draw the attention of the House to the composition of the Committees of Selection. In 1935, when there were 387 Conservatives, 154 Labour Members, and 21 Liberals, the Committee of Selection consisted of six Conservatives, three Labour Members, one Liberal, one National Liberal and one National Conservative. And so it went on, year after year. Look where you will—Gretton, Colonel (Chairman); Albery, Sir Irving; Boulton, Mr.; Davies, Sir George; and so on. In 1947 there were six Conservatives, three Labour Members, one National Liberal, one Opposition Liberal and so on.
The Committee of Selection should by rights have a majority of Government Members. But whether the Opposition

have one, two or three fewer seems to me totally unimportant, and doubly unimportant after what we have heard about the length of time of deliberation. What is important is that the Opposition Members on the Committee of Selection, who should, democratically and rightly, be outnumbered by Members representing the Government, should represent all parts of the Opposition. It is wrong that these Members should be confined simply to the Labour Party when there are, albeit in lesser number than previously, a good selection of independent parties in this House.
Therefore, I ask Government Members to be fair-minded. I ask Opposition Members to be brave and admit that they were elected for themselves and not to serve the deputy Opposition Whip. I ask them to look at this motion, which seeks to give the five minority parties in this House a representative on the Committee of Selection, and to vote in favour of the amendment.

10.55 p.m.

Mr. John Smith: I am sorry to disappoint the hon. Member for Berwick-upon-Tweed (Mr. Beith) in speaking for the Opposition rather than my right hon. Friend the Member for Wakefield (Mr. Harrison), but the motion before us is simple. The hon. Gentleman referred to the special report of the Committee in the Session 1975–76 and quoted accurately from some part of it, but he omitted to read the final sentence, which said:
Your Committee will review the position during the Session, especially in the context of any changes in the composition of the House.
The difference between this and the previous Parliament is in the composition of the House. In the previous Parliament the minority parties numbered 40. In that situation the view taken by the Committee was that although they did not reach the number of 70 which would automatically entitle them to a seat on the Committe of Selection—on a proportional representation basis, I suppose, apart from anything else—the fact that they had more than half that figure, arriving at 40, entitled them to one seat The present situation now is that there are 27 Members representing the minority parties, less than half the number that would automatically entitle them to a seat. I think that that is a very good reason


for making the change proposed in the motion.

Mr. Beith: The right hon. Gentleman is overlooking the most important interpretation of those words in the Committee's report. The Committee, when it made that point, was not supposing that the representation of minority parties would be drastically reduced at a series of unlikely by-elections following the deaths of a large number of Members of the five parties. The Committee was anticipating what actually happened, namely, that the Government's majority in the House might disappear and that it would have to return to the issue of the overall balance between the two sides of the House.

Mr. Smith: I am content to rest not on the interpretation but on the plain meaning of the words, namely, that the recommendation was conditional upon the balance of forces in the House of Commons remaining as it was at the time when the Committee made its recommendation. The report makes clear that the normal basis of selection in getting a Member on to the Committee of Selection would be to achieve the number of 70, which is one-ninth of the membership of the House, excluding Mr. Speaker and the Deputy Speakers. Therefore, I think it is clear that the Committee had in mind that its recommendation was conditional on the balance of forces obtaining at that time.
The simple fact is that, as a result of the election, the balance of forces in the House has changed significantly by reducing the number in the minority parties from 40 to 27, thereby greatly weakening the case they had when they had 40. The matter is as simple as that, and I ask the House to support the motion and to reject the amendment.

10.58 p.m.

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The House is indebted once again to the hon. Member for Nottingham, West (Mr. English) for having initiated an interesting debate on the procedure of the House. If anybody was in doubt before this debate about what the Committee of Selection actually does, that doubt will have been dispelled by this debate. We have been shown what

an important role that Committee performs.
In the course of this debate the proposal of the Procedure Committee in recommendation 46—namely, that there should be a new procedure for the appointment of Select Committees—has been mentioned from time to time, but it is true to say that that is not, strictly speaking, before the House tonight. Until the House has debated the various recommendations of the report it would be inappropriate for Members in general to express a final view. It would certainly be inappropriate for me, as Leader of the House, to preempt what will, I hope, in due course be a debate on this subject. Until the House decides otherwise, the old procedure remains in force.
Although I agree that we should proceed as expeditiously as possible with the discussion of the various recommendations of the Procedure Committee, I would remind the House that there are 76 recommendations. They cannot, in the nature of things, all be debated at once. We must have some kind of priority for them. I have listened carefully to the hon. Gentleman, and I have stored his remarks up for consideration at perhaps a more appropriate moment.

Mr. Gordon Wilson: Does the right hon. Gentleman accept that one of the problems is that there is another motion on the Order Paper which attempts to perpetuate the life of the Committee of Selection until the end of this Parliament? Therefore, by taking the decision tonight that the Committee of Selection should be appointed as it is, we shall be taking a decision which could last until the end of this Parliament, regardless of the recommendations of the Select Committtee on Procedure.

Mr. St. John-Stevas: The motion on the Order Paper refers to the composition of the Committee of Selection. It does not affect its powers, and it would be possible to alter those powers even if the motion were passed tonight.

Mr. English: The right hon. Gentleman is quite right, if one phrase is added; namely, that the Government will give time for such a matter to be debated. Is the right hon. Gentleman committing the Government to that?

Mr. St. John-Stevas: It would not be right for me to make that sort of commitment when we have not begun to debate the important recommendations of the Procedure Committee. We should proceed in an orderly way. I hope that in due course all the recommendations will be debated. It should also be remembered that eight reports on procedure still await debate in the House.
I listened with great interest to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and the machinations that he described with a certain amount of pained surprise that such things could be alleged to be going on in the House. I should like to make the point that it is nothing to do with me—I was not even in shadowy office at the time. There seems to be an internal dispute in the Labour Party, and it would be unfeeling and presumptuous of me to intrude into some kind of private grief.

Mr. Rooker: That is not true. I deliberately gave two examples, one from each side of the House, where hon. Members have been kicked off Standing Committees. It is not a matter that affects one side of the House only, as time will tell.

Mr. St. John-Stevas: Whoever it affects, it has nothing to do with responsibilities—

Mr. Rooker: The right hon. Gentleman black-balled the hon. Member for Wolverhampton, South-West (Mr. Budgen).

Mr. St. John-Stevas: I did nothing of the kind. I shall do what I can to ensure that this unhappy pattern of events does not occur—if it did—again.
I turn to what my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said. It is not necessary, as was suggested by the hon. Member for Perry Barr, that hon. Members should declare their intention of acting honourably. We apply that presumption to all hon. Members. Until the opposite has been established beyond all doubt, we must have confidence in hon. Members that they will act in the best interests of the House and not as puppets for the usual channels on either side of the House.
I turn to the amendment that was moved by the hon. Member for Antrim, South (Mr. Molyneaux). It is an import-

ant amendment, its purpose being to remove the hon. Member for Bothwell (Mr. Hamilton) from the Committee and replace him by the hon. Member for Berwick-upon-Tweed (Mr. Beith). I hasten to say how much I agree that there is nothing personal in this issue. The hon. Member for Bothwell is the corpus delicti in every sense of the term, and he has been selected for this position only as a matter of convenience.
I have a considerable degree of sympathy with the argument that has been advanced by the hon. Members for Antrim, South, for Berwick-upon-Tweed and for Isle of Ely (Mr. Freud), the last in a most interesting historical exegesis, for which we are grateful to him and, no doubt, to the Library staff. But we are bound by the condition that is laid down by Standing Order No. 109 on private business that there can be only nine members on the Committee, and, as the hon. Member for Isle of Ely generously admitted, it is right and proper that the Government side, whichever party that happens to be, should have a majority on the Committee.
So this whole issue comes down to a question of the Opposition. It is the responsibility of the Opposition, not of the Government, how the Opposition seats are divided up. The right hon. Member for Lanarkshire, North (Mr. Smith) advanced a numerical argument. He said that there were 41 minority Members in the previous Parliament and only 27 in this; and if 41 justified a member on the Committee, 27 did not. But then he seemed to say that 41 did not justify a Member anyhow and that the minority parties needed 70 Members to justify having a Member on the Committee.
I am more literate than numerate, but there does not seem to be an overwhelming numerical argument for this case.

Mr. Fletcher-Cooke: Give them half a seat.

Mr. St. John-Stevas: I am grateful for the support of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke). Incidentally, I found his reminiscences most interesting. They stretched back over some 300 years. I knew that my hon. and learned Friend has experience. I did not know that he had that much, and it is not surprising that with such extensive experience my hon. and


learned Friend got straight to the point, which concerns the powers of the Committee. This matter is not before us at present.
This has been a useful debate. In considering these difficult issues, which must be resolved speedily for the good of the

House, I shall certainly bear in mind all the important points that have been made by hon. Members today.

Question put, That the amendment be made:—

The House divided: Ayes 11, Noes 186.

Division No. 8]
AYES
[11.10 p.m.


Alton, David
Penhaligon, David
Wainwright, Richard (Colne Valley)


Beith, A. J.
Powell, Rt. Hon. J. Enoch (S. Down)



Dunlop, John
Ross, Wm. (Londonderry)
TELLERS FOR THE AYES:


Howells, Geraint
Spriggs, Leslie
Mr. Gordon Wilson and


Molyneaux, James
Stewart, Rt. Hon. Donald (W. Isles)
Mr. Clement Freud.




NOES


Ancram, Michael
Fletcher-Cooke, Charles
Morrison, Hon. Peter (City of Chester)


Aspinwall, Jack
Forman, Nigel
Mudd, David


Atkins, Robert (Preston North)
Fraser, Peter (South Angus)
Murphy, Christopher


Atkinson, David (B'mouth, East)
Garel-Jones, Tristan
Myles, David


Baker, Kenneth (St. Marylebone)
Goodhew, Victor
Neale, Gerrard


Baker, Nicholas (North Dorset)
Gorst, John
Needham, Richard


Banks, Robert
Gow, Ian
Neubert, Michael


Beaumont-Dark, Anthony
Gray, Hamish
Newton, Tony


Bendall, Vivian
Greenway, Harry
Normanton, Tom


Berry, Hon. Anthony
Grieve, Percy
Page, Rt. Hon. R. Graham (Crosby)


Best, Keith
Griffiths, Peter (Portsmouth N.)
Patten, Christopher (Bath)


Blackburn, John
Grist, Ian
Patten, John (Oxford)


Blaker, Peter
Gummer, John Selwyn
Pawsey, James


Bonsor, Sir Nicholas
Hamilton, Hon. Archie (Eps'm &amp; Ew'll)
Percival, Sir Ian


Boscawen, Hon. Robert
Hamilton, James (Bothwell)
Pollock, Alexander


Boyson, Dr. Rhodes
Harrison, Rt. Hon. Walter
Raison, Timothy


Braine, Sir Bernard
Hawksley, Warren
Rathbone, Tim


Bray, Dr. Jeremy
Haynes, David
Renton, Tim


Bright, Graham
Henderson, Barry



Brittan, Leon
Hogg, Hon. Douglas (Grantham)
Rhys Williams, Sir Brandon


Brocklebank-Fowler, Christopher
Holland, Stuart (L'beth, Vauxhall)
Rippon, Rt. Hon. Geoffrey


Brown, Michael (Brigg &amp; Sc'thorpe)
Hooson, Tom
Roberts, Michael (Cardiff N. W.)


Brown, Ronald W. (Hackney S)
Hunt, David (Wirral)
Roberts, Wyn (Conway)


Browne, John (Winchester)
Hunt, John (Ravensbourne)
Robertson, George


Buchanan-Smith, Hon. Alick
Jenkin, Rt. Hon. Patrick
Rooker, J. W.


Buck, Antony
Jessel, Toby
Rossi, Hugh


Butcher, John
Jopling, Rt. Hon. Michael
St. John Stevas, Rt. Hon. Norman


Butler, Hon. Adam
Kellett-Bowman, Mrs. Elaine
Shaw, Giles (Pudsey)


Cadbury, Jocelyn
Lambie, David
Shaw, Michael (Scarborough)


Callaghan, Jim (Middleton &amp; P)
Lamborn, Harry
Shepherd, Colin (Hereford)


Carlisle, John (Luton West)
Lang, Ian
Shepherd, Richard (Aldridge-Br'hills)


Carlisle, Kenneth (Lincoln)
Langford-Holt, Sir John
Short, Mrs. Renée


Channon, Paul
Le Marchant, Spencer
Sims, Roger


Chapman, Sydney
Lennox-Boyd, Hon. Mark
Skeet, T. H. H.


Clarke, Kenneth (Rushcliffe)
Lester, Jim (Beeston)
Skinner, Dennis


Cocks, Rt. Hon. Michael (Bristol S.)
Lloyd, Ian (Havant &amp; Waterloo)
Smith, Rt. Hon. J. (North Lanarkshire)


Colvin, Michael
Lloyd, Peter (Fareham)
Snape, Peter


Cook, Robin F.
McElhone, Frank
Speller, Tony


Costain, A. P.
MacGregor, John
Spicer, Jim (West Dorset)


Cowans, Harry
MacKenzie, Rt. Hon. Gregor
Spicer, Michael (S. Worcestershire)


Cranborne, Viscount
McNair-Wilson, Patrick (New Forest)
Squire, Robin


Cryer, Bob
McQuarrie, Albert
Stanbrook, Ivor


Dalyell, Tam
McWilliam, John
Stevens, Martin


Dean, Joseph (Leeds West)
Major, John
Stewart, John (East Renfrewshire)


Dorrell, Stephen
Marlow, Antony
Stradling Thomas, J.


Douglas-Hamilton, Lord James
Marshall, Jim (Leicester South)
Taylor, Mrs. Ann (Bolton West)


Dover, Denshore
Marten, Neil (Banbury)
Thompson, Donald


Dunn, Robert (Dartford)
Mather, Carol
Thorne, Neil (Ilford South)


Durant, Tony
Mawby, Ray
Thornton, George


Eastham, Ken
Mawhinney, Dr. Brian
Townend, John (Bridlington)


Edwards, Rt. Hon. N. (Pembroke)
Maxwell-Hyslop, Robin
Townsend, Cyril D. (Bexleyheath)


Eggar, Timothy
Mayhew, Patrick
Trippier, David


English, Michael
Mellor, David
Viggers, Peter


Evans, John (Newton)
Meyer, Sir Anthony
Waddington, David


Eyre, Reginald
Miller, Hal (Bromsgrove &amp; Redditch)
Wakeham, John


Faith, Mrs. Sheila
Mills, Iain (Meriden)
Waldegrave, Hon. William


Farr, John
Moate, Roger
Wall, Patrick


Fenner, Mrs. Peggy
Monro, Hector
Waller, Gary


Finsberg, Geoffrey
Moore, John
Ward, John


Fletcher, Alexander (Edinburgh N.)
Morrison, Hon. Charles (Devizes)
Watson, John




Wells, P. Bowen (Hert'rd &amp; Stev'nage)
Wickenden, Keith
TELLERS FOR THE NOES


Wheeler, John
Wilkinson, John
Mr. John Cope and


White, Frank R. (Bury &amp; Radcliffe)
Williams, Delwyn (Montgomery)
Mr. Peter Brooke.


Whitney, Raymond
Winterton, Nicholas

Question accordingly negatived.

Main Question put and agreed to.

Ordered,

That Mr. Ronald W. Brown, Mr. Walter Clegg, Mr. A. P. Costain, Mr. Ifor Davies, Mr. Paul Dean, Mr. James Hamilton, Mr. Philip Holland, Mr. Harry Lamborn and Mr. Kenneth Lewis be members of the Committee of Selection.

Motion made, and Question proposed.

That the members of the Committee of Selection nominated this day shall continue to be members of the Committee for the remainder of this Parliament.—[Mr. John Stradling Thomas.]

Mr. Deputy Speaker: With the agreement of the House, I propose that at the same time we should discuss the motion
That this Order be a Standing Order of the House.

11.20 p.m.

Mr. Bob Cryer: The motion states:
That the members of the Committee of Selection nomated this day shall continue to be members of the Committee for the remainder of this Parliament.
The "remainder of this Parliament" could be several years. The logical prognostication is a year or 18 months. We should lay down general ground rules at the beginning of the Parliament that are sensible and reasonable, especially in the light of the comments that have been made tonight.
I am not imputing any suggestion that the Committee of Selection is corrupt or is not trying to carry out its duty. However, the House should have some degree of accountability. Some serious reservations have been issued and aired by the minority parties and by representatives of both the Conservative and Labour Parties. It has been said that there have been areas of dissatisfaction in the past on both the Conservative and Labour Benches.
The debate could be accurately described as a House of Commons occasion. We are not imputing that the members of the Committee are not trying their best when we make some criticism of the setting up of the Committee for four or five, years. We are saying that there

should be a greater degree of accountability.
It is a fact that House of Commons occasions have some relationship to the realities of ordinary people. The composition of a Standing Committee may affect the outcome of the legislation before it and so affect those who come within it. It is reasonable that Members of Parliament should have the opportunity once every year to re-elect the Committee of Selection. The re-election would probably go through on the nod, but if reservations were expressed about the performance of the Committee during the preceding 12 months the re-election would be the occasion for scrutiny and alternative suggestions.
I suggest that although the election at the end of 12 months may be without dissent, it may be controversial, and it may be challenged. That right ought to be given to hon. Members. It would extend, and not diminish, the rights of hon. Members. The right hon. Gentleman should withdraw the motion and bring to the House a motion that pro-vides that the Committee that we have appointed shall sit for no more than 12 months before returning to the House for reappointment on an annual basis.
That would be fairer. It would give us a greater degree of scrutiny and afford an extension of powers to Back-Bench Members of Parliament. If the criticisms that were aired tonight about the past performance of the Committee are valid—I believe that they are—the record of the Committee should be scrutinised, instead of allowing the sores to rub along the whole length of this Parliament. The private selection arrangements cause resentment. They may be seen by those involved to be perfectly proper. Nevertheless, they cause a good deal of resentment and a sense of frustration among the Members of Parliament involved.
This is a House of Commons occasion which has important repercussions. If there is a debate late at night it gives the Back Bencher a greater degree of involvement in the conduct of this Parliament. That is a reasonable step forward for this Parliament to take.


I ask the Leader of the House to withdraw the motion and to assure the House that he will bring back the motion which I suggested, namely, that there should be an annual election of the members of the Committee.

11.26 p.m.

Mr. Maxwell-Hyslop: I take the point made by the hon. Member for Keighley (Mr. Cryer). It has considerable force. However, I should like to put forward an alternative point which I think also has some validity. This motion is far more binding on the Government than it is on the House. It is the equivalent of the parson's freehold. The historical object of the parson's freehold was to prevent his being sacked by those more powerful than himself if he preached views that were unpopular with the powers of the day.
This motion makes it difficult for the Government to remove members of the Committee of Selection if they exercise the independence of judgment which I am confident they will exercise. I point out to any of our colleagues who are not totally conversant with our procedure that although the House, having taken a decision, cannot properly reverse it in the same Session of Parliament, it can properly do so in subsequent Sessions.
Secondly, it is not unknown to find at the beginning of the Order Paper that Standing Order No. 1, which says that the House should rise at 10 o'clock, is to be suspended. I do not regard that as precluding the House from making changes in the Committee of Selection should that Committee unhappily fail in the task entrusted to it by the House. Apart from a motion to suspend a Standing Order, there can be a motion of censure on the Chairman of the Committee. That is perfectly permissible. But these are technical points rather than the point of substance to which I return.
I regard the motion as giving security of tenure to the Committee of Selection to carry out its task honourably and with such weight that it would be a public scandal for the Government to remove its Chairman or members because they were not complaisant to the wishes of the Government. On that balance of judgment, I come down against the valid

point made by the hon. Gentleman in opposing the motion

11.30 p.m.

Mr. English: We have heard my hon. Friend the Member for Keighley (Mr. Cryer) and the hon. Member for Tiverton (Mr. Maxwell-Hyslop) produce arguments in opposite senses about the motion. But there is a third possibility. This issue does not need to be discussed at all tonight and does not need to be decided at this hour.
The point at issue is perfectly simple. The Prime Minister has given a commitment that the debate on our procedure, the main issue, will be held before the Summer Recess. The Leader of the House, naturally enough, supported her in that, and we expect that that debate will in due course be held and the House will be able to make a decision upon it.
We now have a Committee of Selection—the previous motion gave us that. Indeed, all the Labour Members voted with the Conservatives to ensure that we should have that Committee of Selection. We shall continue to have that Committee of Selection until October 1980 if nothing else is done. If this motion is not passed, we shall only be able to discuss the matter again in October 1980; that is all that will happen. But before the forthcoming Summer Recess the main issue will be discussed and decided upon by the House. 
I suggest to the right hon. Gentleman that, having had the motion moved to extend the life of the Committee of Selection for the life of this Parliament, he should simply adjourn it, leave it on the Order Paper and bring it back to the House after the procedure debate to be held in a few weeks' time.

11.32 p.m.

Mr. St. John-Stevas: Again, we have had an interesting debate. It has been brief, as is perhaps not entirely inappropriate at this hour. We have had a classic deploying of arguments.
The argument put forward by the hon. Member for Keighley (Mr. Cryer) is the classic Chartist argument for annual elections, annual reviews, a chance for checking to be made on those who are elected, a re-selection process, if one likes. The other argument was advanced by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and was based on the


case for security of tenure, which, of course, is the great guarantee of independence in our society. Most of it, unfortunately, has been eroded, and the parson's freehold which he used as an analogue has, alas, by and large gone—I think unhappily and mistakenly so.
Let us see in this issue that the arguments are balanced one against the other. It is not, in my view, an entirely clear question, and one could argue the matter at great length.

Mr. Maxwell-Hyslop: There is a memory that I should like to recall to the House. When the parson's freehold was about to be abolished in an unjust way, my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew), who is now Under-Secretary of State for Employment, drew to the attention of the House what was happening, quite unexpectedly, and the House threw out the Church measure that was proposing to do it. Some colleagues may remember that. So the House is very tender on this point.

Mr. St. John-Stevas: I am grateful for that interesting reminiscence. I recall the debate. Although in a sense it had nothing to do with me, I waited for it until a reasonably late hour to vote for the parson's freehold, on general grounds of Conservative principle.
I recognise the balance of the arguments in this case. Quite frankly, I think that if one has a balanced argument one does not go far wrong if one follows the accustomed course. I am sure that the hon. Member for Nottingham, West (Mr. English) will produce some precedent which none of us has ever heard of so I shall measure my words carefully.
In recent years, certainly, it has been the custom for the Committee of Selection to be appointed for the duration of a Parliament.
It is true that we could withdraw the motion and start again, as the hon. Gentleman suggested, but the argument against doing that is that it would lead to more delay and it would delay the opportunity which I hope the House will have, perhaps even sooner than the hon. Gentleman expects, to debate and decide

upon important recommendations made by the Procedure Committee.
Meanwhile, we have to get on, and the reason why I want this Committee to be appointed tonight is that only when it is appointed can we get on—

Mr. English: The Committee has been appointed.

Mr. St. John-Stevas: I see the distinction. Only when these motions are decided can we proceed rapidly with the appointment of the domestic Committees which I know it is the wish of the hon. Gentleman should be done.

Mr. English: I am sorry to challenge the right hon. Gentleman, but he is wrong. He had to have the Committee of Selection appointed. I understand that, and it has just been done. But the reason why the right hon Gentleman wants this motion is that it is not in accordance with most precedents. I suggest to the right hon. Gentleman that we should act as he should, like a Conservative, and not have this motion because it is designed to overturn the practice of the House.
The practice of the House is that the Committee of Selection that we have just appointed, for an unstated period, is, by the common custom of the House, appointed for this Session, which, as we all know, will end in October 1980. The motion is trying to reverse that practice of hundreds of years and say that the Committee should be appointed not for only a Session but for the whole of this Parliament. I suggest to the right hon. Gentleman that he should follow the argument that he used for conservatism.

Mr. St. John-Stevas: I did not say that.

Mr. Dennis Skinner: Does the right hon. Gentleman have "Erskine May"?

Mr. St. John-Stevas: Yes, I have "Erskine May". I recommend it to the hon. Gentleman. It will put him to sleep at almost any time.
I am not saying that there are not arguments balanced on each side, but we have a limited amount of time. We have a very full Session ahead of us. We have a limited amount of time before the Summer Recess for debating procedural matters, and it would complicate matters further if we did not resolve this matter


tonight. I recognise the force of the argument, but I hope that we can resolve this matter tonight, and then the way will be clear to resolve other and more important procedural matters.

Question accordingly agreed to.

Ordered,

That the members of the Committee of Selection nominated this day shall continue

Mr. Deputy Speaker: I shall put the Questions on the two motions separately.

Question put:—

The House divided: Ayes 159, Noes 18.

Division No. 9]
AYES
[11.38 p.m.


Ancram, Michael
Greenway, Harry
Page, Rt. Hon. R. Graham (Crosby)


Aspinwall, Jack
Grieve, Percy
Patten, Christopher (Bath)


Atkins, Robert (Preston North)
Griffiths, Peter (Portsmouth N.)
Patten, John (Oxford)


Atkinson, David (B'mouth, East)
Grist, Ian
Pawsey, James


Banks, Robert
Gummer, John Selwyn
Percival, Sir Ian


Beaumont-Dark, Anthony
Hamilton, Hon. Archie (Eps'm &amp; Ew'll)
Pollock, Alexander


Bendall, Vivian
Harrison, Rt. Hon. Walter
Raison, Timothy


Berry, Hon. Anthony
Hawksley, Warren
Renton, Tim


Best, Keith
Henderson, Barry
Rhys Williams, Sir Brandon


Blackburn, John
Hogg, Hon. D. (Grantham)
Rippon, Rt. Hon. Geoffrey


Blaker, Peter
Hogg, N. (East Dunbartonshire)
Roberts, Michael (Cardiff N. W.)


Bonsor, Sir Nicholas
Hooson, T.
Roberts, Wyn (Conway)


Boscawen, Hon. Robert
Hunt, David (Wirral)
Rossi, Hugh


Boyson, Dr. Rhodes
Hunt, John (Ravensbourne)
St. John Stevas, Rt. Hon. Norman


Braine, Sir Bernard
Jenkin, Rt. Hon. Patrick
Shaw, Giles (Pudsey)


Bright, Graham
Jessel, Toby
Shaw, Michael (Scarborough)


Brittan, Leon
Jopling, Rt. Hon. Michael
Shepherd, Colin (Hereford)


Brooke, Hon. Peter
Kellett-Bowman, Mrs. Elaine
Shepherd, Richard (Aldridge-Br'hills)


Brown, Michael (Brigg &amp; Sc'thorpe)
Lamborn, Harry
Sims, Roger


Brown, Ronald W. (Hackney S.)
Lang, Ian
Skeet, T. H. H.


Browne, John (Winchester)
Langford-Holt, Sir John
Smith, Rt. Hon. J. (North Lanarkshire)


Buchanan-Smith, Hon. Alick
Le Marchant, Spencer
Snape, Peter


Buck, Antony
Lennox-Boyd, Hon. Mark
Speller, Tony


Butcher, John
Lester, Jim (Beeston)
Spicer, Jim (West Dorset)


Butler, Hon. Adam
Lloyd, Peter (Fareham)
Spicer, Michael (S. Worcestershire)


Cadbury, Jocelyn
MacGregor, John
Squire, Robin


Carlisle, John (Luton West)
MacKenzie, Rt. Hon. Gregor
Stanbrook, Ivor


Carlisle, Kenneth (Lincoln)
McNair-Wilson, Patrick (New Forest)
Stevens, Martin


Channon, Paul
McQuarrie, Albert
Stewart, John (East Renfrewshire)


Chapman, Sydney
Major, John
Stradling Thomas, J.


Clarke, Kenneth (Rushcliffe)
Marlow, Antony
Thompson, Donald


Cocks, Rt. Hon. Michael (Bristol S.)
Marten, Neil (Banbury)
Thorne, Neil (Ilford South)


Colvin, Michael
Mather, Carol
Thornton, George


Cope, John
Mawby, Ray
Townend, John (Bridlington)


Costain, A. P.
Mawhinney, Dr. Brian
Townsend, Cyril D. (Bexleyheath)


Cranborne, Viscount
Maxwell-Hyslop, Robin
Trippier, David


Dorrell, Stephen
Mayhew, Patrick
Viggers, Peter


Dover, Denshore
Mellor, David
Wakeham, John


Dunn, Robert (Dartford)
Meyer, Sir Anthony
Waldegrave, Hon. William


Durant, Tony
Miller, Hal (Bromsgrove &amp; Redditch)
Wall, Patrick


Edwards, Rt. Hon. N. (Pembroke)
Mills, Iain (Meriden)
Waller, Gary


Eggar, Timothy
Moate, Roger
Ward, John


Eyre, Reginald
Monro, Hector
Watson, John


Faith, Mrs. Sheila
Moore, John
Wells, P. (Hertford &amp; Stevenage)


Farr, John
Morrison, Hon. Charles (Devizes)
Wheeler, J.


Fenner, Mrs. Peggy
Morrison, Hon. Peter (City of Chester)
Whitney, Raymond


Finsberg, Geoffrey
Mudd, David
Wickenden, K.


Fletcher, Alexander (Edinburgh N)
Murphy, Christopher
Wilkinson, J.


Forman, Nigel
Myles, David
Williams, D. J. D. (Montgomery)


Fraser, Peter (South Angus)
Neale, Gerrard
Winterton, Nicholas


Garel-Jones, Tristan
Needham, Richard



Goodhew, Victor
Neubert, Michael
TELLERS FOR THE AYES:


Gorst, John
Newton, Tony
Mr. David Waddington and


Gow, Ian
Normanton, Tom
Lord James Douglas-Hamilton.


Gray, Hamish






NOES


Alton, David
Holland, S. (Lambeth, Vauxhall)
Skinner, Dennis


Beith, A. J.
Howells, Geraint
Taylor, Mrs. Ann (Bolton West)


Callaghan, Jim (Middleton &amp; P.)
Marshall, Jim (Leicester South)
White, Frank R. (Bury &amp; Radcliffe)


Cook, Robin F.
Molyneaux, James



Dunlop, John
Penhaligon, David
TELLERS FOR THE NOES:


Eastham, Ken
Powell, Rt. Hon. J. Enoch (S. Down)
Mr. J. Rooker and


English, Michael
Ross, Wm. (Londonderry)
Mr. Bob Cryer.


Freud, Clement

to be members of the Committee for the remainder of this Parliament.

Ordered,

That this Order be a Standing Order of the House.—[Mr. John Stradling Thomas.]

BRITISH RAILWAYS (INVESTMENT)

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Mather.]

11.49 p.m.

Mr. Peter Snape: Perhaps I may, first, congratulate you, Mr. Deputy Speaker, on your elevation to your present post. I know of no other Member of this House who could be transported, as it were, from the Mafia to the judiciary and receive only praise for having been moved so. It is a hallmark of the respect and affection in which you are held on both sides of the House that I give you my sincere congratulations this evening.
I congratulate also the Parliamentary Secretary on his appointment. I warn him that the National Union of Railwaymen will be a fairly strict watchdog over his and his Department's activities. I hope that he will give due consideration to our views. He must do that in respect of not only our views but the views of others. I hope that he will bear in mind that any criticism that we might make will, at least in these early days, be more constructive than obstructive. I cannot promise that that will continue. A lot will depend on the attitude of himself and his Department in the years to come.
Having got the polite stuff out of the way, I now move on to the meat of what I should like to say. I had better declare an interest straight away as the secretary of the NUR group in the House. Also, I concede that the railway industry gave me a steady, if not particularly lucrative, source of income for all of my former working life, as it did for my father also.
Many of us who work or have worked on the railways feel that we get a very raw deal from various commentators and various, sometimes self-styled, experts and that for too long we have been used as a music hall joke by the national newspapers and by others.
The NUR believes that Britain gets its railways on the cheap. By any international comparison, pound for pound of taxpayers' money, British Rail gives the best value for money in Europe. It is

often said that West Germany is an example for this country to follow. Again, pound for pound of taxpayers' money, British Rail does twice as well as does the Deutsche Bundesbahn. That ought to be acknowledged far more often than it is at present.
In real terms, over the past three years the cost of the railways to the British taxpayer has been reduced, because of frozen cash limits and investment levels, by 25 per cent. Not much credit is given for that by the Conservative Party or the national press, but it happens to be true. We believe that British Rail has done a magnificent job in the face of mounting financial difficulties. Those difficulties will continue to worsen if the situation is not changed. A change in Government policy is needed.
I am not saying that the present Government have actually laid down policy. Previous Labour Governments, of which I have been a member, ought to have faced reality concerning their financial attitude to British Rail, because in the long term the Labour Government's attitude to British Rail would have been extremely damaging.
I hope that the Parliamentary Secretary will do his best to see that his Department provides more cash, in the form of investment cash, if he wants the present success story—that is what it is with the railways—to continue. At present, the Railways Board is 15 months in arrears with its track renewal programme. Should such arrears continue and worsen over the next few years, the speed restrictions which are already affecting many main lines will be brought down lower and lower, and point-to-point timing will be extended further and further—a complete reversal of the situation over the past decade or so.
Many trains, on many lines, are still signalled and the bell codes are passed between signal boxes constructed at the turn of the century. Without the necessary investment, that will continue, and it is poor economy to allow that to happen. Not only are those signal boxes outdated and labour-intensive—and those signalmen are members of my trade union—but the cost of mechanical renewals gets higher every year.
Self-styled and occasionally self-appointed experts on the railway system say that the key is productivity and that


somehow we can wring more and more out of fewer and fewer railwaymen. I see a smile on the face of the tiger opposite, the hon. Member for Eastbourne (Mr. Gow). Over the past five years he has expressed his views on the railways and nationalised industry as a whole. I am surprised that he can tear himself away from his important duties. I noticed his picture in The Observer a couple of weeks ago—and he looked most fetching—as one of the men of influence surrounding the Prime Minister. I hope that he will tell the Prime Minister that I have had a good debate on the railway system and that all it needs is a little more cash, which might go against some of the hon. Gentleman's basic philosophies.
Turning to the locomotives, of the present fleet of about 2,000 the vast majority will be life-expired by the end of the 1980s. The present building rate of new locomotives is 20 a year, and at the present rate only 290 new freight locomotives will have been built by 1986. That does not give much hope for the great transfer of freight from one mode of transport to the other. It may not be what the present Government would like, but it will not happen, and nor would it under the policies of the previous Government.
It is said, more often than not by newspapers, that the railway unions are the big stumbling block to productivity. When one looks at the east coast main line, the old LNER—it is not a company for which I worked—one finds that it is hoped by the end of the 1980s to have the whole line controlled by no more than six signal boxes. That means the elimination of hundreds of existing mechanical, electro-mechanical and some fairly modern existing power signal boxes and an obvious vast reduction in the number of jobs for signalmen. My union welcomes that investment. We hope to redeploy those of our members who are displaced because of the closure of those signal boxes.
A signal box that opened at Kings Cross in October 1977 and replaced 57 former mechanical signal boxes. It covers 83 route miles of track and 260 track miles, and signals in the peak hours 94 trains in the course of an hour, all with six signalmen, a supervisor, an assistant and two station announcers. That is a fine example of productivity for which

the railway unions get no credit, and it is about time that they did.
The central issue on investment is the renewal of the diesel multiple unit fleet. For many people in this country they are the only trains that are available. There is so little electrified track that the DMU fleet is the workhorse of the commuter system outside the South of England. Every one of the 3,400 diesel multiple units was built during a short period in the 1950s, and all are now nearing the end of their lives.
Under the fairly small refurbishment programme—and it may not even be carried out under present cash limits—no matter how refurbished, these vehicles cannot survive for more than 10 years, yet there is nothing in the offing to replace them. British Rail's current estimate is that the cost of renewing that fleet is about £300 million. That money is not available to BR under the present investment ceiling and, to be fair, would not have been available under the previous Government's philosophies.
On 28 March the present Minister of Transport, in posing a question to the then Secretary of State for Transport, said:
there is absolutely no justification for another Beeching round of cuts".—[Official Report, 28 March 1979; Vol. 964, c. 434.]
In fact, the Minister has already spelt out the first spending priority of the Ministry of Transport, because without the investment for which I am calling—that £300 million—another round of Beeching cuts is inevitable. There is no point in maintaining the lines if trains cannot be run on them. The fact is that there will not be any trains after a 10-year period because the diesel multiple unit fleet will then be condemned to the knacker's yard, or its mechanical equivalent.
British Rail assesses the investment that it needs at £380 million a year for the next 15 years, and after that at £360 million a year. Indeed, just to replace the worn-out assets the Board would need an investment level about 30 per cent. higher than it is at present over the next decade. What proposals do the Government have to provide the Board with the investment that it requires to sustain the railway at its present size and level of activity? I would appreciate some indication of this from the Parliamentary Secretary.
It would be unwise to look at railway investment without comparing the investment poured into its main competitor—the road haulage industry. I am not one of those who say that we should abolish every heavy lorry, although occasionally, when I find myself driving a car behind one, I wish I were. There is a great deal of unfairness about the respective investment in the two modes of transport. If one analyses expenditure within the railway system, one finds that 47½ per cent. of it goes on day-to-day maintenance, another 47½per cent. on renewal of existing assets and a mere 5 per cent. on improvements. A similar analysis of the road system shows that the story is very different—6 per cent. on maintenance, 11 per cent. on renewals, and a massive 83 per cent. on improvements. Of course, at present the roads investment is based on a rather specious method of cost-benefit analysis, while investment in rail and other forms of transport is generally taken on the basis of normal commercial criteria, so beloved of the hon. Member for Eastbourne and his good friend the former director of the International Monetary Fund. Dr. Witteveen.
This situation surely biases investment in favour of roads and against railways. Recently the Leitch committee in its work on trunk road assessment looked at these two methods in detail. It took a sample of five railway schemes using both cost-benefit techniques and commercial criteria. It found that in each case the benefits projected on the basis of cost-benefit analysis exceeded those projected on the basis of normal financial appraisal, and the benefits ranged from 39 per cent. more to a staggering 1,770 per cent. more. Not unnaturally, the Leitch committee concluded that cost-benefit analysis would normally be greater than normal financial appraisal benefit, and that the system should be given a try on the railways. At the very least, the two modes of transport should be compared in a similar way, because the present system militates against railway investment.
No debate of this kind would be complete without some mention of electrification. Given the present fuel situation, it is shortsighted, to say the least, to have reductions in public transport, particularly the railways.

Indeed, the Secretary of State for Energy came out with something very worrying during questions on Monday. He implied that those railway services that had been cut were not essential anyway and were lightly used. Of course they are. But they are not peak-hour services, which are most expensive—another revelation perhaps for the hon. Member for Eastbourne and the good doctor, too. They are off-peak services, which cost very little because the fixed assets and the staff are there anyway. Those are the very trains which are now being withdrawn.
It is a strange energy policy to pursue if it is said "Let us leave it all to the free market". If the Department of Energy feels that it should all be left to the free play of market forces, perhaps we can save some money right away by abolishing the Department of Energy. That Department does not appear to wish to play any part in the management of the country's resources. If we do not go in for greater railway electrification, we are abdicating our energy responsibilities.
I appreciate that I am encroaching on the Minister's time to reply to this debate, but I hope that he will forgive me. However, I wish to mention the vexed question of Southern region commuter services. I see in their places not only the hon. Member for Eastbourne, but the hon. Member for Faversham (Mr. Moate), both of whom have expressed concern about the plight of commuters. I do not want either hon Gentleman to think that the NUR is anti the Southern region commuters, despite their unfortunate propensity for voting in the wrong direction every five years. The NUR is certainly not anti those commuters. If the hon. Member for Eastbourne wants to denationalise the whole of the public sector, let him find me a few enterpreneurs in Eastbourne who want to buy and run the Southern region commuter service. It is one of British Rail's biggest loss-makers.
Hon. Members who represent constituencies in that part of the country should remember that every day millions of pounds of capital assets, paid for by the taxpayer, do nothing at all for 20 hours out of 24 so that Southern Region commuters can start work in London at or about nine o'clock in the morning and return home at or about 5 p.m.
I do not blame those constituents, or the hon. Gentlemen, but I appeal to them to display a little fairness in future. If normal commercial criteria are to apply, and if the doctrines and philosophies of the hon. Member for Eastbourne and the good doctor are to apply, we know that, on British Rail's own figures, freely available in the 1979 annual report, the rate of fare increases required from Southern region commuters, particularly those in the inner areas, is about 25 per cent. Therefore, if the free market philosophy is to prevail, the two hon. Gentlemen to whom I have referred should pop back to their constituencies and say "Sorry, folks, but the philosophy for which you voted means that you will have to pay an extra 25 per cent. for your rail tickets". Those are the facts, and I hope that both hon. Gentlemen will temper their criticisms by respecting them.
I shall resume my seat almost at once, but I wish to conclude by saying that there is a new spirit in our railways. The railway unions and most of those who work in the railway industry feel that in Sir Peter Parker they have a chairman who is concerned, involved and hoping to bring forward a new railway era. Certainly the railway unions are prepared to do their bit in co-operating. I hope that the Government and their Transport Ministry are also prepared to do their bit.

12.9 a.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I wish to begin by thanking the hon. Member for West Bromwich, East (Mr. Snape) for his kind words. I wish to thank him also for raising the subject of railway investment. He is always assiduous in the House in his interest in railway matters, and I look forward to debating this subject frequently with him over the next few years. This is a good opportunity for the Government to give some idea of their approach to the problem.
The hon. Gentleman will appreciate that, as yet, the Government have come to no conclusions on the investment problems of British Rail, because we have been but a brief time in office. Indeed, the pattern of investment decisions in the nationalised industries is such that no Government could come to decisions at this stage of the year. But I emphasise

that this debate gives an opportunity to give an idea of our approach.
I wish to assure the hon. Gentleman that there is no question of the Government treating the serious matter of railway investment as a party political foot-ball. I am not sure that we shall always achieve maximum agreement, but we shall certainly do our best to achieve an understanding on a sensible approach to the problems of railway administration.
I begin by taking up what the hon. Gentleman said about cash limits and the position of commuters in the context of what has been announced today about the Government's pattern of spending and the cash limits of the railways. Today it has been announced that the previous cash limits of British Rail have been reduced by £15 million. I am sure that all hon. Members appreciate that in the context of restraint in public spending it would be unreal for transport not to take its share. British Rail has to consider its contribution in the light of the revised cash limits.
I should like to make clear and reassure the hon. Gentleman that today's announcement has no effect on the investment ceiling set for British Rail. It also has no effect on the grant to passenger services and will not necessarily affect the level of passenger fares. In his response to my right hon. and learned Friend's Budget Statement, the Leader of the Opposition referred to the effect of the Budget compared with previous Budgets and suggested that it might affect the level of commuter fares. That is not the case. The Board will consider the situation, and it and the Government hope to manage without further increases in passenger fares this year. The Leader of the Opposition's comments were inappropriate and misleading.
The Government have been formed for only a few weeks, and it will be some time before a considered view on British Rail investment is reached. Every Government have accepted that, while investment priorities rest ultimately with the Board, investment plays a fundamental role in determining the railways of the future. No Government can ignore the cost to the nation of the investment decisions of British Rail. Successive Administrations rely on statutory powers and have always imposed a ceiling on the


Board's total investment. That policy shall continue.
I should like to return to what the Board has achieved within the ceilings imposed. At times, the hon. Gentleman was playing down the Board's achievements in the modernisation that has taken place beneath the ceilings that have operated. The hon. Gentleman referred to the peaking of investment that is tending to occur largely because of the peaking in investment in new equipment on the railways which took place in the late 1950s and early 1960s. That will have an important influence on the renewal needs of the railways in the 1980s.
The Government have taken careful note of Sir Peter Parker's remarks in the Board's annual report and accounts for 1978 about the renewal needs. The hon. Gentleman mentioned the earlier peaking of investment and said that the Board wishes to aim for an investment level of 30 per cent. higher than at present to replace worn-out assets.
Much is being done to renew rolling stock, locomotives and other assets which require replacement in the earlier investment peak. The Board has authority to renew 25 freight locomotives and 1,550 wagons per year. It has similar authority for the construction of 220 electric multiple units a year—largely for commuters, especially in the London area. Substantial programmes are in hand for renewing track, signalling and other infrastructure assets, which amounted last year to £165 million.
The hon. Gentleman asked whether these already large programmes of renewal need to be increased and whether the increases can be accommodated within the Board's existing investment ceiling. He particularly mentioned diesel multiple units, so I shall take them as an example of the present position and the point that the Board's planning has reached. I understand from the Board that replacements for the current fleet have not yet been developed. They are still in the design stage, although considerable work has been done. The Board expects to complete a prototype of a new diesel electric multiple unit by the end of the year. Testing has now been completed of an experimental unit based on body parts from the Leyland National bus, to-

gether with a modified freight wagon underframe. The research on this project was jointly funded by my Department and British Rail.
The Board has now authorised the construction of a two-car prototype rail bus based upon the principles embodied in the experimental vehicle. It aims to begin trial runs in 1980. If successful, such a rail bus might be suitable for providing services on lightly used local lines. It will be some time before the Board submits any proposals to my Department for replacing its diesel multiple unit fleet, either with the new vehicle that I have mentioned or with some other design. When proposals are submitted they will be urgently considered, together with the implications that they will obviously pose for the investment ceiling. Meanwhile, the Board is undertaking a major programme of refurbishment of existing diesel multiple units in order to improve their reliability and the level of comfort for passengers.
Let me now turn to the main and overall problem. It is helpful in considering the Board's future investment programme to divide the business into two main groups. Let me begin with the large network of commuter services in London and South-East England, the local stopping services in many parts of the country and the services operated under agreements with the passenger transport executives in the main conurbations outside London. These services are all those which receive support for social reasons—often called the social railway. Obviously there will be a continuing requirement of support of some kind, although the railways must contribute to the Government's public expenditure policies, and support for these services—those in the social railway—must be kept as low as possible.
In this area, where we accept the basic case for continued support, the Government will wish to hear from the Board what is the lowest cost way of renewing assets required for those services. The Board will need to assess the likely traffic and the least expensive way of providing a reasonable service. We shall need the Board's estimates of the extent and timing of renewal needs of these services. When we get those estimates, we shall give careful consideration to the Board's view that they will need investment funds


devoted to them above the level advocated in its present programme.
Let me turn to the Board's other businesses. These are the aspects which, in the Government's opinion, should be and are operated on commercial lines. These are the intercity, freight and parcels sides of the business.
The Board's investment ceiling obviously covers all its activities, including not only the ones that I have mentioned but subsidiary businesses such as Sealink UK Ltd. and British Transport Hotels Ltd. All those businesses there-fore have a bearing on the level of investment ceiling required. There is no social or economic case for subsidising any of these commercial businesses. It is the Board's policy, as well as the Government's, that they should be operated on commercial lines. Many of them are large by any standard, and a substantial part of the Board's investment programme is devoted to commercial development and renewal of their assets.
This means that investment in them must show a satisfactory commercial return. When assets are worn out, it must not be assumed, as it cannot be assumed in any other business, that they should automatically be renewed A careful

assessment must be made of where the market opportunities justify renewal, and, if so, in what form. Nor is it enough for investment simply to improve the quality of service and technical performance. It must cover any extra costs of doing so and show that they can be justified by an adequate return. Businesses must also be able to finance the investment within public expenditure limits.
The result is—and this has been repeatedly accepted in the Board's statements, particularly in respect of inter-city traffic and freight traffic—that the case for increased investment in the commercial sector must depend upon sound evidence that plans for better commercial performance are working. We are looking forward to the Board's own work in setting proper financial targets to these aspects of the business, and the investment programme for those aspects will be judged against those commercial targets.

The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at nineteen minutes past Twelve o'clock.